Industrial real estate is still too often associated with long-term financing.
This is a misreading.
The almost automatic equation - real estate equals long duration - stems more from habit than from rigorous financial analysis. It confuses the nature of the asset with the time horizon of the need, two dimensions that should be clearly distinguished.
In practice, this confusion deprives many industrial companies of a flexibility that is, in fact, readily available.
This is precisely where asset based lending (ABL) offers a different and often overlooked reading of industrial real estate.
Industrial real estate: a specific type of asset
Industrial real estate - factories, production sites, warehouses, operational offices - is neither a purely financial asset nor a simple balance-sheet item.
It simultaneously fulfils several roles:
- a production tool,
- a structuring element of the balance sheet,
- a foundation of operational stability.
It is precisely this hybrid nature that makes it a high-quality collateral within an asset based lending framework. Not because it is “immobile” or intrinsically long-term, but because it is tangible, readable and controllable.
The long-term reflex - and why it is misleading
In collective financial thinking, real estate naturally implies long maturities.
This perception is largely inherited from traditional mortgage lending: amortising bank loans over fifteen or twenty years.
Asset based lending (ABL) follows a different logic.
ABL focuses primarily on:
• asset value,
• level of protection,
• potential liquidity,
• and alignment with a specific financing need.
Duration is not a dogma.
It is a structuring parameter, to be adjusted.
Short-term asset based lending on real estate: an overlooked logic
Financing industrial real estate over a short period - sometimes as short as one year - may appear counter-intuitive. Yet, in certain configurations, it is precisely the most appropriate solution.
Such situations typically arise when:
• a company is going through a transitional phase,
• a temporary liquidity need must be addressed,
• a capital reorganisation is underway,
• or a longer-term refinancing is envisaged but not yet timely.
In these cases, real estate is not financed to be held over time, but temporarily mobilised to navigate a specific phase.
The key then lies in disciplined structuring:
• conservative loan-to-value ratios,
• a clearly defined maturity,
• and an exit scenario identified from the outset.
Long-term maturities: when they genuinely make sense
Conversely, it would be just as misleading to assume that asset based lending on real estate should systematically be short-term.
Longer maturities are entirely appropriate when:
- operational visibility is strong,
- cash flows are stabilised,
- and alignment exists between the asset, the business and the governance.
In such situations, duration is not a matter of comfort.
It is the reflection of a coherent financial architecture.
Rethinking the question of time
The real question, therefore, is not whether industrial real estate should be financed short-term or long-term.
The question is both simpler and more demanding:
at what point in time, and for what precise purpose, is the asset being mobilised?
It is often in this reading of time - more than in the nature of the asset itself - that the quality of a financing structure is ultimately determined.