£7m Commercial Mortgage: Logistics Unit, Dover

The situation

An experienced commercial property investor came to us in spring 2026 having agreed terms on a logistics and warehouse unit close to the Port of Dover at £10.8 million, let to a single logistics operator on a long full repairing and insuring lease with more than ten years unexpired and no break. The tenant handles customs clearance and freight consolidation work, the kind of business that has grown steadily since the post-Brexit border regime created permanent demand for customs infrastructure and port-proximate warehousing in East Kent.

The investor needed £7 million, around 65% of the purchase price, and needed it inside the exclusivity period agreed with the vendor. The deal was clean on paper. What it needed was a lender who would underwrite a single-tenant exposure of this size in Kent at full gearing, at a workable rate, without dragging the process past the exclusivity deadline.

Why logistics lends well right now

Logistics and industrial is the strongest commercial asset class we see, and it has been for a few years now. The clients buying these units are typically established investors who watched retail yields soften and office demand thin out through the early 2020s and moved their allocations into sheds, where occupational demand from freight, e-commerce and customs operators has held rents up and kept voids short. Around a third of the commercial investment cases we look at now are industrial or logistics in some form. Lenders know this. Credit committees that hesitate over a secondary office will clear a well-let warehouse in days, because the rent roll behind it is easier to believe in.

Dover adds its own layer. Since the UK left the EU customs union, the border needs physical infrastructure: inspection facilities, customs clearance agents, bonded warehousing, freight consolidation space. That demand is structural, not cyclical, and occupiers tied to port throughput tend to stay put because proximity is their business model. A logistics tenant half a mile from the port cannot recreate that position anywhere else in the county.

Plenty of lenders say they have appetite for industrial, but far fewer will actually hold a £7 million single-tenant exposure in Kent at 65% without cutting the gearing at credit. That gap between stated appetite and written terms is where a broker earns their keep on deals like this one.

How the facility was structured

We took the case to a shortlist of lenders we knew were writing logistics at this size, and placed it with a challenger bank with genuine appetite for the asset class. The bank underwrote the deal on the income first: debt service coverage of around 1.35x tested at the lender's stressed rate, comfortably above their minimum threshold, supported by a net passing rent of around £575,000 a year from a tenant whose accounts showed consistent growth across the post-Brexit period.

The DSCR is the number that carried the case. On large commercial mortgages the lender is not really lending against the building, they are lending against the lease, and a 1.35x coverage ratio at a stressed rate tells credit that the rent can absorb a meaningful rate rise before the facility comes under any pressure. The tenant covenant did the rest. A logistics operator with a decade of accounts, growing turnover and a business physically anchored to the port is exactly the sort of income a challenger bank wants on its book.

What nearly slowed it down

One wrinkle. The unit included a secondary yard with a canopy structure that the valuer initially wanted to exclude from the rental assessment because its planning position was unclear, and stripping it out would have trimmed the assessed rent enough to squeeze the DSCR closer to the lender's floor. We went back to the vendor's agent, pulled the original consent and the lease plan, and demonstrated that the yard was both consented and expressly included in the demise. The valuer reinstated it. That single piece of paperwork protected the coverage ratio and, with it, the full £7 million.

This is why we tell clients to get the lease, the rent deposit deed, the EPC and the planning history in front of the broker before anyone approaches a lender. Almost every delay we see on commercial completions traces back to a document that could have been found in week one being hunted down in week five.

Timeline: terms to completion in seven weeks

Seven weeks is quick for a facility of this size. It happened because the document pack was complete before the first lender conversation, because the lender was chosen for genuine appetite rather than headline rate, and because the one valuation issue that surfaced was answered with evidence inside days rather than argued about for weeks. My role once terms were agreed was to keep every party moving, chasing the valuer, chasing the solicitors, chasing the bank, so the client could keep running his business while the facility completed around him.

Risk considerations

A single-tenant investment concentrates risk, and we discussed that with the client openly before terms were signed. If the tenant ever failed or vacated at lease end, the building would need re-letting, and the loan repayments would continue in the meantime. What gave everyone comfort here did not need dressing up. The tenant's business is physically tied to the port, which makes a voluntary relocation improbable, and the customs and freight sector it serves has grown every year since the border regime changed. The unit itself is standard, well-specified logistics stock in a location with persistent occupational demand, so the re-letting case is credible at or near the passing rent. And the DSCR headroom at the stressed rate means the facility can absorb a material rise in interest costs before the income position tightens.

Rate risk was the client's main concern. We modelled the facility at the pay rate, at the stressed rate and at a further stress above that, and walked the client through what each scenario meant for his net income from the asset, so the decision to proceed was made with the downside fully priced rather than discovered later.

The market context

What we have seen over the last few years is investors treating port-adjacent logistics as core stock rather than a specialist play. The occupier demand created by the post-Brexit customs regime has not faded as some predicted it would; it has settled into permanent infrastructure, and the units serving it are letting on longer terms to stronger covenants than much of the wider industrial market. Every quarter we see at least one investor moving capital out of retail or office and into industrial and warehouse property, and the lenders have followed them there. For borrowers, that means gearing and pricing on well-let logistics is currently as good as anything in the commercial mortgage market.