SBA 504 Feasibility Study Case Study: A 36,533 Square Foot Multi-Tenant Warehouse on North Clinton Street in Fort Wayne, Indiana, Feasible as Restructured

A regional building-products distributor proposes to buy the 36,533 square foot, five-unit, 100 percent leased warehouse at 3427 N Clinton St, Fort Wayne, Allen County, Indiana, through an eligible passive company financed with an SBA 504 loan, and to move its own operation into 18,700 square feet of it as the existing leases expire. The building is listed at $4,000,000 at a 7.50 percent capitalization rate on the brokerage's detail page and at $3,600,000 at 8.31 percent on the listing platform's index pages, both of which imply about $300,000 of in-place net operating income, or $8.21 per square foot. As proposed, at the $4,000,000 ask, the standard 10 percent borrower contribution and an operating-company rent equal to the rent the departing tenants pay, the real estate entity's debt service coverage ratio (DSCR) is 0.80 times in its first year and 0.90 times in its fifth. Restructured at a $3,600,000 price, a 20 percent contribution of $779,100, and an operating-company rent of $11.50 per square foot net that the distributor's cash flow carries 2.7 times over, the same building covers at 1.21 times in Year 1, 1.28 times in Year 3 and 1.36 times in Year 5. Determination: not feasible as proposed; feasible as restructured, conditioned on the operating company holding 51 percent of the rentable area at closing, a zoning verification letter, the post-sale assessment and the Phase I environmental site assessment.

Model study prepared by MMCG Invest | Michal Mohelsky, J.D., FMVA | October 3, 2026

MMCG concludes that the proposed acquisition of 3427 N Clinton St is not feasible as proposed and is feasible as restructured. The building fits the operating company: a 1956 masonry warehouse with five units, two dock-high and two drive-in doors, 16 to 19 foot clear height in the suite currently marketed, a fenced yard and 87 parking spaces on 4.66 acres, between Lima Road and Coliseum Boulevard on the city's north side, in a Northeast Indiana industrial market that began 2026 at 4.75 percent vacancy on The Zacher Company's count. The proposal fails on price and on structure. At the $4,000,000 ask the building is priced at a 7.50 percent cap rate on $300,000 of in-place income, which is an investment price, and a 504 loan financing 90 percent of a $4,318,500 project costs $332,000 a year to service. If the operating company pays what the tenants it replaces pay, $8.21 per square foot net, the real estate entity's income is the same $300,000 the seller shows, less the management, reserves and vacancy an owner must carry, and coverage is 0.80 times.

Restructured at a $3,600,000 price, the figure the same listing shows on the platform's index pages, with a 20 percent borrower contribution of $779,100 and the debenture reduced to 30 percent, debt service falls to $267,800; with the operating company paying $11.50 per square foot net for 18,700 square feet, a rent its own cash flow covers 2.7 times after its existing debt service and distributions, the real estate entity covers at 1.21 times in Year 1, 1.28 times in Year 3 and 1.36 times in Year 5, and the bank's first lien of $1,947,800 sits at 54 percent of the building's implied value at the seller's own in-place income and cap rate. The determination is conditioned on the operating company occupying at least 51 percent of the rentable area at closing, which in a building that is 100 percent leased today means that two suites totaling at least 18,632 square feet must be vacant by lease expiration, surrender or relocation on the closing date; on a zoning verification letter, because the "CM3" label on the listing appears to be a retired district name; on a Phase I environmental site assessment for a 1956 building whose tenants include a paint retailer; on the Allen County assessor's treatment of the sale, since the current $13,018 tax bill implies an assessed value far below the price; and on the debenture being priced at the month of funding.

This is an MMCG model study: a complete feasibility analysis performed on a real, publicly marketed building using public data, prepared to show 504 lenders, certified development companies and owner-user borrowers how MMCG tests the acquisition of a leased multi-tenant warehouse by a business that will occupy part of it. It is not a client engagement. MMCG has no relationship with the owner, the listing brokerage, the tenants or any prospective buyer, and the analysis does not represent an offer, an appraisal or a recommendation to buy the building. The operating company is a model operator constructed for the study, not a real business. Figures drawn from the listing, the Indiana Department of Local Government Finance certified tax rates, the Fort Wayne and Allen County zoning ordinances, The Zacher Company's 2026 market report, Greater Fort Wayne Inc., the Census Bureau and the Fort Wayne listing inventory on CityFeet and Showcase are identified as such. Figures labeled MMCG assumption are underwriting inputs set by MMCG. Items that could not be verified from a primary source at the study date are listed in the Conditions and Limitations section rather than estimated silently: the parcel's current zoning district and the use-table rows for that district, the assessor's record and the taxing district, the rent roll and lease expirations, the inside-city water and sewer rates, Indiana Michigan Power's current general service tariff, the FEMA panel, and the Indiana Department of Environmental Management file for the address.

The operating company is a regional distributor of building products to contractors and dealers in northeast Indiana, northwest Ohio and southern Michigan, organized in 2015, with 28 employees, about $16,000,000 of sales and an operating margin before occupancy cost of about 7.5 percent, or $1,200,000 (MMCG assumption for the model operator). It leases 16,000 square feet in two buildings and needs 18,000 to 20,000 square feet under one roof with dock-high loading, a drive-in door and fenced yard storage for trusses and lumber. Its principals will form an eligible passive company to buy the building, lease 18,700 square feet to the operating company under a net lease running at least the term of the loan, and keep the remaining three suites leased to the existing tenants. The operating company guarantees the loan. The two suites the operating company will take are the ones the listing brokerage is marketing or that expire first; the rent roll is available from the brokerage on request and was not public at the study date.

Operations plan

The operating company moves in a single phase after closing, with the yard fenced for outdoor storage of trusses and dimensional lumber subject to the district's outdoor storage rules, racking in the warehouse bays, and the office and showroom space in the suite that has it. The real estate entity manages the three third-party suites with a local property manager at 4 percent of collections and carries a capital reserve of $0.25 per square foot a year for a building of this age.

Building program

The building sits at 3427 N Clinton St, on the east side of North Clinton Street between Lima Road and Coliseum Boulevard, in the north-central industrial and commercial corridor of Fort Wayne about two miles north of downtown. The listing describes the suite on the market as 3,689 square feet of office, 1,929 square feet of shop and 7,008 square feet of warehouse with two drive-thru doors, two docks and a fenced yard. The parcel is 4.66 acres, or 202,990 square feet, on which the building covers 18 percent, which is land-heavy for a 1956 building and leaves yard storage and truck circulation that a modern multi-tenant site on two acres would not. Coliseum Boulevard connects to Interstate 69 to the west; the distance to the interchange was not measured at the study date, and the Indiana Department of Transportation traffic count on North Clinton Street was not retrieved.

Allen County had 385,410 residents at the 2020 census and 402,329 at the July 2025 estimate, a gain of 4.4 percent. Its largest private employers, as ranked by Greater Fort Wayne Inc., are Parkview Health, Amazon, General Motors, Lutheran Health Network, Sweetwater, Lincoln Financial Group, Michelin North America, Fort Wayne Metals, Shambaugh and Son and Steel Dynamics. Greater Fort Wayne Inc. reported seventeen economic development projects in 2025 with $120.3 million of capital investment and 550 new job commitments, among them a Bombardier service center of 64,500 square feet at the airport, a Tau Wire Corp. plant of more than $18,000,000, and an Ellison Bakery expansion of $7,000,000. The Zacher Company's 2026 report counts about 122 million square feet of industrial space in the ten-county region, 44 percent of it in Allen County, with vacancy at 4.75 percent at the start of 2026 against 5.39 percent a year earlier, 2.6 million square feet built in 2025, and eight speculative buildings absorbed.

The site's two liabilities are age and the taxing of the sale. The building is seventy years old, and the capital allowance, the roof and HVAC inspection and the Phase I are conditions of the land contract. The current tax bill of $13,018 on the listing, at a certified 2026 gross rate of about 2.81 to 2.90 percent of assessed value, implies an assessed value of about $450,000 against a price of $3,600,000, and Indiana assesses commercial property at its true tax value, so the study carries a post-sale assessment of $3,000,000 and discloses it as an assumption. The resulting tax of about $84,300 a year is recoverable from the tenants under net leases, but it raises the operating company's occupancy cost by about $43,100 a year and the third-party tenants' by the balance.

The listing labels the zoning "CM3". That label does not appear in the City of Fort Wayne Zoning Ordinance, Chapter 157, as amended April 8, 2026, or in the Allen County Zoning Ordinance effective the same date, whose commercial districts are C1, C2, NC, SC, C3 and C4 and whose industrial districts are BTI, I1, I2 and I3. A 2013 Fort Wayne Common Council ordinance refers to a "CM3 (General Commercial) District" under Chapter 157, and the city's January 1, 2015 zoning ordinance conversion table maps CM3 to C3, General Commercial. The parcel's current district is therefore most likely C3 and is not an industrial district. The April 30, 2025 draft redline of Chapter 157 lists "Warehouse/storage facility" and "Wholesale facility" as permitted uses in C3 at Section 157.216(B); that text is a draft and was not confirmed in the adopted April 8, 2026 version at the study date, and the adopted use table, dimensional standards, parking and loading requirements for the district were not retrieved.

The study therefore carries two conditions. The first is a zoning verification letter from the Allen County Department of Planning Services, which administers zoning for Fort Wayne, confirming the district and stating that the operating company's warehouse, wholesale and showroom uses are permitted and that outdoor storage of building materials in the fenced yard is permitted or can be permitted. The second is confirmation that the existing uses, including any manufacturing or repair tenant, are conforming. No rezoning or variance is assumed, because the building has operated as a multi-tenant industrial and showroom property for decades and the uses proposed are the uses in place.

The SBA occupancy test is written into the program. Under 13 CFR 120.131 the operating company must occupy at least 51 percent of the rentable property of an existing building at closing; 51 percent of 36,533 square feet is 18,632 square feet, and the study carries 18,700 square feet in two suites. Because the building is 100 percent leased today, the test can be met only if two suites of at least that combined area are vacant at closing by expiration, surrender or relocation of the tenants, which depends on the rent roll and lease expirations the brokerage holds. That is the first condition of the determination and the first question any CDC will ask.

Water and sewer are supplied by Fort Wayne City Utilities, whose rate schedules took effect June 22, 2026 for water and January 1, 2026 for sewer; the inside-city commercial rates were not retrieved at the study date and the building's consumption is small for a distributor. Electricity is supplied by Indiana Michigan Power under its Indiana tariff book, IURC No. 20, in the edition dated September 2, 2026, with general service on Sheet 12 and large general service on Sheet 18; the current customer, energy and demand charges on those sheets were not retrieved and the tenants' utility costs are carried as tenant expenses under net leases in any case. Natural gas in Allen County is supplied by NIPSCO; service at the address was not confirmed and the listing says only "heating".

Property tax is computed from the Indiana Department of Local Government Finance's 2026 certified gross tax rates for Allen County: 2.8975 per $100 of assessed value in taxing district 074, Fort Wayne-Wayne Township, and 2.8092 in district 073, Fort Wayne-Washington Township. The parcel number carries the suffix 073, and the study carries the Washington Township rate of 2.8092 percent, with the district to be confirmed from the tax bill. Indiana caps the tax on non-residential property at 3 percent of gross assessed value under IC 6-1.1-20.6, so the cap does not bind at either rate. On the $3,000,000 assessed value the study assumes after the sale, the annual tax is about $84,300, against $13,018 on the listing today; the study carries the higher figure as a net lease pass-through, with the operating company's 51.2 percent share, about $43,100, inside its occupancy cost, and discloses that the assessor's practice on a sale of this kind was not verified. Insurance is carried at $12,000 a year for a sprinklered masonry building in inland Indiana (MMCG assumption), recovered under the net leases.

The demand case for an owner-user acquisition is the operating company's business, and the market analysis serves two narrower purposes: pricing the third-party space, and testing the price of the building against the alternative of buying or building elsewhere.

On the first, the Fort Wayne industrial market offered ten listings of 19,900 to 52,416 square feet for lease at the study date, at asking rents of $3.95 to $8.00 per square foot a year for the eight single-price listings, a mean of $6.14 and a median of $5.73, with lease type not stated on the index; smaller bays of 2,400 to 21,000 square feet asked $5.50 to $8.75. The subject's in-place average of $8.21 per square foot net sits at the top of that range, which is consistent with a building whose suites include office and showroom finish, and the study holds third-party rents at the in-place level with 3 percent annual escalation and a 7 percent vacancy and credit loss allowance, above the market's 4.75 percent vacancy, for a building with three small tenants.

On the second, the Fort Wayne for-sale inventory in the 20,000 to 80,000 square foot band at the study date was thin: 4929 New Haven Avenue, 60,462 square feet of manufacturing space at $5,052,979, or $83.57 per square foot at a 7 percent cap rate; 2205 Bremer Road, 25,325 square feet built in 2006 with 30 foot clear height at $2,585,000, or $102.07 per square foot; 4646 Arden Drive, 20,000 square feet of new construction with 22 foot clear at $1,799,000, or $89.95; 4133 New Haven Avenue, 24,908 square feet built in 1930 at $1,460,000, or $58.62; and 3300 Lower Huntington Road, 34,160 square feet at $990,000, or $28.98 per square foot, with 17 to 20 foot clear height and two loading doors. The platform's index average for Fort Wayne warehouses was $88 per square foot at an average size of 35,876 square feet. Against that inventory the subject's $109.49 per square foot at the $4,000,000 ask is the most expensive building per foot in the market other than new construction, and $98.54 at $3,600,000 is in line with the 2006 and new-construction comparables for a building of 1956 vintage with land, income and showroom finish. The Zacher Company's 2026 report notes second-generation buildings selling for up to $70 per square foot in some cases. The study therefore conditions the price at $3,600,000 and treats the $4,000,000 figure as the as-proposed case.

MMCG identified seven industrial buildings for sale, four of them in the subject's size band and three above it, and ten for lease in Fort Wayne at the study date. Year built and clear height were not shown for most for-sale listings on the index pages, and no closed sale with a public price was found in the last twelve months, which is disclosed below. Listing dates were not published.

Comparable Number 1 4929 New Haven Avenue, Fort Wayne 46803 This 60,462 square foot manufacturing building is listed at $5,052,979, or $83.57 per square foot, at a 7 percent cap rate. Year built and clear height were not retrieved.

Comparable Number 2 2205 Bremer Road, Fort Wayne This 25,325 square foot warehouse built in 2006 with 30 foot clear height is listed at $2,585,000, or $102.07 per square foot.

Comparable Number 3 4646 Arden Drive, Fort Wayne This 20,000 square foot new building with 22 foot clear height is listed at $1,799,000, or $89.95 per square foot, and is also offered for lease at $8.00 per square foot.

Comparable Number 4 4133 New Haven Avenue, Fort Wayne This 24,908 square foot building dating from 1930 is listed at $1,460,000, or $58.62 per square foot.

Comparable Number 5 3300 Lower Huntington Road, Fort Wayne 46809 This 34,160 square foot warehouse with 17 to 20 foot clear height, two loading doors and three-phase power on 1.29 acres is listed by The Zacher Company at $990,000, or $28.98 per square foot, reduced from $1,250,000; the listing shows 1999 as the year built and an aggregator shows 1966.

Comparable Number 6 8645 Aviation Drive, Fort Wayne 46809 This 150,000 square foot speculative shell with 32.5 to 36.5 foot clear height is listed at $13,000,000, or $86.67 per square foot, and sets the ceiling for modern product in the market.

Comparable Number 7 2980 to 2990 East Coliseum Boulevard, Fort Wayne This 45,946 square foot property is listed at $6,500,000, or $141.47 per square foot, and is labeled as a non-industrial type on the index; it is noted for the corridor and excluded from the price test.

For lease in the 19,900 to 52,000 square foot band: 2529 West Ferguson Road, 19,900 square feet at $7.75; 205 East Collins Road, 22,900 at $7.95; 4646 Arden Drive, 20,000 at $8.00; 4422 Airport Expressway, 40,000 at $5.95; 5130 Executive Boulevard, 52,000 at $5.50; 2905 Reynolds Street, 25,530 at $4.50; 9801 Airport Drive, 26,171 at $3.95; 9501 Airport Drive, 31,500 at $5.50; 3320 West Ferguson Road, 10,000 to 46,674 at $5.00; and 6502 Nelson Road, 20,000 to 52,416 at $3.95 to $10.00.

The operating company's rent is set at $11.50 per square foot net, above the $8.21 in-place average and above the market's asking range, for three reasons the study documents. First, the rent is what the real estate entity needs to reach the lender's 1.25 times floor by Year 3 with the third-party income carried conservatively, and in an owner-user file the operating company's rent is set to the real estate entity's requirement, not to the market, provided the operating company can pay it. Second, the operating company can pay it: on the model operator's $1,200,000 of cash flow before occupancy cost, after $180,000 of existing equipment debt service and $260,000 of income taxes and distributions, $760,000 remains against a total occupancy cost of $281,200 in Year 1, a cover of 2.7 times, and the global cash flow of the operating company and the real estate entity together, after the operating company's share of taxes, insurance and common area cost, covers all debt service about 2.2 times. Third, the operating company's total occupancy cost of $15.04 per square foot, comprising $11.50 of rent, $2.31 of property tax, $0.33 of insurance and $0.90 of common area cost, buys dock-high loading, a drive-in door, a fenced yard and showroom space under one roof, against two leased locations today.

The lender's check on the rent is the appraisal. At the seller's in-place income of $300,000 and the 8.31 percent cap rate on the index listing, the building's implied value is $3,600,000, and the bank's first lien of $1,947,800 is 54 percent of that figure, with the combined bank and debenture at 86.6 percent; an appraisal at market rent rather than at the operating company's rent does not impair the bank's position.

Closing is carried in the first quarter of 2027 with the operating company in occupancy at closing and the first full year carried as 2027. Rents escalate 3 percent a year (MMCG assumption, consistent with the comparable set's typical escalations). The three third-party suites are carried at the in-place average with a 7 percent vacancy and credit loss allowance from the first year; no lease-up is required because the suites are occupied.

Location: 3427 N Clinton St, Fort Wayne, IN 46805 Size in SF: 36,533 Land: 4.66 acres

Source: listing; MMCG

The debenture fees are carried at about 2.65 percent of the debenture, comprising the fiscal 2027 upfront guaranty fee of 0.50 percent, which is not waived for a distributor outside a rural area, and the CDC processing, funding and underwriting fees. The capital allowance is an assumption pending the inspections and is the item most likely to move; the roof and the two rooftop units on a 1956 building are the usual sources of a larger number.

Loan Assumptions (as proposed)

Loan Assumptions (restructured)

The restructuring takes $400,000 out of the price and $347,200 of additional equity into the stack, holds the bank at 50 percent of cost and cuts the debenture by $558,700. Debt service falls by $64,200 a year, and the operating company's rent, at $11.50 rather than $8.21, adds $61,500 of income; the two together move coverage from 0.80 times to 1.21 times in the first year.

The project is an eligible SBA 504 project because the real estate will be owned by an eligible passive company and leased to an operating company that occupies more than 51 percent of the rentable property, guarantees the loan and uses the building in its own business; the lease runs at least the term of the loan and the rent is set to cover the real estate entity's debt service. The borrower contribution is 10 percent under 13 CFR 120.910, because the operating company has operated for more than two years and a multi-tenant warehouse is a general-purpose building; the study carries 10 percent as proposed and 20 percent as restructured, with the additional contribution a lender's condition rather than a program requirement.

The job opportunity standard is one job per $95,000 of debenture for loans approved on or after October 1, 2025, which is 19 jobs at the as-proposed $1,727,400 debenture and 13 jobs at the restructured $1,168,700 debenture, against the operating company's 28 employees; the standard is met on retention. The debenture is fixed-rate over 25 years; fiscal 2027 fees are 0.50 percent upfront and 0.203 percent annually, neither waived. SOP 50 10 8.1, effective October 1, 2026, governs the file; the acquisition is of real estate only, so Appendix 15 does not apply. The combined SBA exposure is inside the $10 million limit that took effect on July 4, 2026.

The environmental screen turns on the building's history rather than the borrower's industry. Warehousing and storage is not among SBA's environmentally sensitive industries, but the building dates from 1956, its tenants include a paint retailer, and its prior uses were not retrieved; the study carries a Phase I environmental site assessment as a condition and the Indiana Department of Environmental Management's records search as a step in it.

The real estate entity's expenses under net leases are the items the leases do not recover: management of the third-party suites, a capital reserve and the owner's own legal and accounting cost. Taxes, insurance and common area maintenance are recovered from the tenants and from the operating company and are shown for the operating company's occupancy cost rather than in the real estate entity's statement.

Recoverable expenses carried for the occupancy cost test (Year 1): property tax $84,300 on a $3,000,000 assessed value at 2.8092 percent (MMCG assumption as to the assessment); insurance $12,000; common area maintenance, snow, landscaping and yard lighting $0.90 per square foot, or $32,900. The operating company's share at 51.2 percent is $43,100 of tax, $6,100 of insurance and $16,800 of common area cost, which with rent of $215,000 makes a Year 1 occupancy cost of $281,200, or $15.04 per square foot.

The real estate entity covers from the first year at 1.21 times, reaches 1.28 times in Year 3 and 1.36 times in Year 5, with a Year 3 yield on total project cost of 8.8 percent. As proposed at $4,000,000 and 10 percent equity with the operating company at the in-place rent, the same building produces coverage of 0.80 times in Year 1, 0.82 times in Year 2, 0.84 times in Year 3, 0.87 times in Year 4 and 0.90 times in Year 5 against annual debt service of $332,000, with a Year 1 shortfall of $68,000; the proposal does not reach 1.0 times within the projection period, and the as-proposed row is the determination. Raising the operating company's rent to $11.50 inside the as-proposed structure lifts Year 3 coverage only to 1.03 times, which is why the price and the equity, not the rent alone, are the restructuring.

At Year 3 rents, with the operating company's rent fixed by its lease, the real estate entity's coverage depends on the three third-party suites.

The real estate entity covers its debt from the operating company's rent and less than half of the third-party space, which is the credit's shape: the operating company carries the building, and the tenants carry the cushion. The 1.25 times threshold at 87.6 percent occupancy sits five points under the forecast, which is tighter than it looks, because 17,833 square feet in three suites means one dark suite of 7,000 square feet takes third-party occupancy to 61 percent and coverage to 1.10 times.

The restructured building holds above 1.0 times in every single-factor case and above 1.25 times in none of them, which is the position of a seventy-year-old multi-tenant building bought at a full price with three small tenants: adequately capitalized at 20 percent equity to absorb one problem, with no margin for two. The controlling sensitivity is the third-party rent roll, and the determination conditions on the rent roll and lease expirations being delivered and underwritten before the commitment.

The determination of not feasible as proposed and feasible as restructured is subject to the following conditions precedent on the restructured program:

The following items could not be verified from a primary source at the study date and are disclosed: the parcel's current zoning district and the adopted Chapter 157 use table, dimensional standards, parking and loading requirements for it; the assessor's record of assessed value, building area and year built, and the taxing district; the rent roll, in-place rents by suite, lease expirations and tenant identities beyond those shown on the listing; the inside-city water and sewer rates and the current Indiana Michigan Power general service tariff; the FEMA flood insurance rate map panel for the parcel; the Indiana Department of Transportation traffic count on North Clinton Street; the Indiana Department of Environmental Management file for the address; the year built and clear height of most for-sale comparables; and the reconciliation of the $4,000,000 and $3,600,000 asking prices, which the listing brokerage holds.

This model study applies the methodology described on MMCG's SBA warehouse feasibility study and industrial feasibility study pages. MMCG prepares industrial feasibility studies for SBA 7(a) and 504, USDA Business and Industry and conventional lenders nationwide, with engagements from $4,900 and delivery in 9 to 16 business days.