What rate can I get on an industrial building refinance in Southern California?

Relationship-driven community banks were quoting low-to-mid 5s fixed for well-leased industrial collateral with strong guarantors in 2026. This Long Beach closing priced at 5.50% fixed on a 5-year term, meaningfully inside the 6%+ pricing typical of regional banks that don't know the submarket.

Can I get interest-only payments on a bank commercial loan?

Yes, banks will structure an interest-only window when there's a reason. This closing carried 18 months of interest-only payments before converting to a 25-year amortization schedule, giving the owner maximum cash flow up front.

How do lenders handle tenant rollover risk on a single-tenant or two-tenant industrial building?

Instead of cutting proceeds, some banks use a lease-rollover reserve: if a major lease isn't renewed by a deadline (often 3 months before expiration), the borrower funds an account holding several months of that tenant's rent, released when a renewal or replacement lease is signed. That structure preserved full proceeds on this deal.

What is a 3-2-0 prepayment penalty?

It means 3% of the balance if you prepay in year one, 2% in year two, and nothing from year three on. On a 5-year loan, that leaves the final three years completely open, which matters if you might sell or refinance.

How do banks size a commercial refinance loan?

Typically the lesser of several tests. This deal was sized to the lesser of $2,900,000, 55% of appraised as-is value, or the amount supported by a 1.45x debt service coverage ratio at the note rate on a 20-year amortization. Conservative sizing tests are common at banks offering the sharpest fixed rates.

Case Study: $2.9M Industrial Refinance in Long Beach at 5.50% Fixed With 18 Months Interest Only

Deal at a Glance

Loan Amount	$2,900,000
Property	Leased industrial warehouse / office building (two commercial tenants)
Location	Long Beach, California
Transaction	Refinance
Lender Type	Local community bank
Rate	5.50% fixed (365/360 basis)
Term / Amortization	5 years / 25-year amortization, months 1-18 interest only
Sizing	Lesser of $2.9M, 55% of as-is value, or 1.45x DSCR at note rate on a 20-year schedule
Prepayment	3-2-0 (open after year two)
Fee	0.5% ($14,500)
Recourse	Full guaranty (principal and family trust)
Closed	Q2 2026

The Deal That Walked in the Door

We are Commercial Lending Solutions, a commercial mortgage brokerage based in Los Angeles, California (CA), and this client was practically a neighbor: a longtime Long Beach property owner, a family trust that had held the building for years, refinancing an industrial warehouse and office property leased to two established commercial tenants, an engineering firm and a specialty manufacturer. The asset was a classic Long Beach infill industrial story: functional building, land-constrained submarket twenty minutes from the ports of Los Angeles and Long Beach, tenants who had been in place for years. The eventual takeout came from a local community bank.

Commercial Lending Solutions specializes in industrial refinancing and community bank placements for owners across Los Angeles County and Long Beach, and this deal was a direct fit.

The goal was straightforward, replace the maturing debt with the sharpest fixed rate available and keep monthly payments as light as possible. Straightforward goals still deserve a real process. We built a formal side-by-side comparison across the lender field in mid-2025, kept it live as quotes were refreshed, and the spreads that emerged were meaningful, in rate, in structure, and above all in how each lender treated the one soft spot in the deal: both tenant leases rolled during the proposed loan term.

What Made It Hard

Lease rollover inside the loan term. Both tenants' leases expired before the 5-year maturity. Many lenders respond to rollover by cutting proceeds or shortening the term.
Payment sensitivity. The owner wanted the low fixed rate of a bank loan but also wanted early-years cash flow closer to what an interest-only structure provides.
Rate environment. With most banks quoting 6%+ for industrial refis, getting into the 5s required a lender that knew the submarket and wanted the relationship.

How We Ran the Process

Trevor Damyan, a California-licensed real estate broker (DRE #02244836), ran the finalists down to a community bank headquartered in the property's own city, an institution that has been lending on Long Beach real estate for over a century, against a New York-headquartered bank's term sheet. The out-of-market bank quoted wider and treated the lease rollover as a proceeds problem. The hometown bank treated it as a covenant problem, which is a much cheaper place to solve it. Their proposal, first issued in late March 2026 and executed in revised form on April 7, won on every axis that mattered:

$2,900,000 at 5.50% fixed for the full 5-year term, with a 0.5% loan fee ($14,500)
18 months of interest-only payments, then principal and interest of roughly $17,950 per month on a 25-year amortization
Conservative sizing at the lesser of 55% of appraised value or a 1.45x debt service coverage test, the trade that buys a 5-handle rate
3-2-0 prepayment, completely open after year two, preserving a sale or refinance exit for most of the term
Rollover handled with a reserve covenant, not a proceeds cut: if either tenant's lease is not renewed by three months before expiration, the borrower funds a reserve account equal to six months of that tenant's rent, released once a renewal or replacement lease is signed. Full proceeds at closing, protection for the bank only if the risk actually materializes.
Relationship banking: the borrower moved the property's operating accounts to the bank, standard for community bank pricing at this level

The loan closed in Q2 2026, secured by a first deed of trust on the property.

"The lease rollover was the whole negotiation. Instead of letting a lender cut proceeds for a risk that had not happened yet, we structured a reserve that only comes into play if a tenant actually walks."
, Trevor Damyan, Commercial Lending Solutions

Why We Won This One

The lease-rollover reserve is the detail worth stealing. When a lender sees tenant expirations inside the loan term, the lazy answers are lower proceeds, a shorter term, or a higher rate, all of which make the borrower pay today for a risk that may never show up. A springing reserve flips that: the borrower keeps full proceeds and the sharp rate, and only posts collateral if a lease actually goes unrenewed. If your lender responds to rollover risk by cutting your loan, ask about a reserve structure instead, or find a lender who will.

The other lesson is that community banks beat money-center pricing on their home turf. A bank that has financed buildings on the same streets for decades does not need a risk premium to get comfortable with Long Beach infill industrial. The out-of-market competitor quoted the same deal wider.

Is This Structure Right for Your Deal?

If you own leased industrial or commercial property with a maturing loan, especially with lease expirations that are making other lenders skittish, we can run the field and structure around the rollover. We arrange permanent loans and industrial financing from a network of more than 1,000 capital sources, including the community banks that price their own backyards best.

Apply for refinancing or call us at 310.708.0690 to talk through your property.

This is one of 32 closings we have arranged in Los Angeles County. Read about how we work as a Los Angeles commercial mortgage broker, see our Los Angeles commercial mortgage loans, or browse all 46 California closed deals.

Trevor Damyan

Commercial Mortgage Broker, Commercial Lending Solutions | CA DRE 02244836

Trevor Damyan is a commercial mortgage broker at Commercial Lending Solutions with a background in structured finance at CBRE and Marcus and Millichap Capital Corporation. He specializes in bridge loans, construction financing, SBA programs, DSCR loans, and complex capital structures for investors and developers across all 50 states.

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