Defense-adjacent CRE includes DoD-tenanted office and industrial, defense-contractor-tenanted manufacturing and R&D, and certain proximity-sensitive sites. Lender focus: FAR-compliant lease terms, lease cancellation provisions, CFIUS review on foreign investment, and security-clearance-related buildout constraints. Specialty lender options.
Defense-adjacent CRE financing: what's distinctive and where lenders focus
Asset categories: (1) directly DoD-tenanted real estate (military housing, office, industrial leased directly to a service branch or defense agency), (2) prime-defense-contractor-tenanted real estate (operating facilities, R&D, classified work), (3) sub-tier-defense-supplier-tenanted CRE (smaller component manufacturers, machine shops), (4) proximity-sensitive sites (CFIUS-regulated zones near military installations, ports, or critical infrastructure).
DoD lease underwriting: federal leases follow the Federal Acquisition Regulation (FAR) and may include unilateral cancellation provisions for convenience by the government. Lender treatment: tenant credit is U.S. government (top-tier), but cancellation provisions reduce the effective lease term for underwriting. GSA and DoD lease terms are typically 5 to 10 years firm, 10 to 20 years total with renewal options. Lenders model the firm period.
Defense-contractor lease underwriting: prime contractors carry strong credit and long lease terms. Sub-tier contractors may have tighter financial profiles and shorter leases. Where the tenant operates classified work, building specifications (SCIF. Sensitive Compartmented Information Facility, Tempest shielding, secure access) limit alternative-use value. Lender treatment: factor specialized infrastructure into LTV haircut.
CFIUS / FIRRMA review: per Treasury CFIUS / FIRRMA framework, certain real-estate transactions near U.S. military installations, ports, or critical infrastructure are subject to mandatory or voluntary CFIUS review when there is foreign investor involvement. This affects deal structure (foreign-LP equity, foreign-lender participation) on covered assets. Pre-closing CFIUS counsel review is essential where any non-U.S. participation is contemplated.
Lender bench: a small specialty lender options focuses on defense-tenanted real estate. Government-services-specialty banks, specialty REITs (some net-lease REITs specialize in government-tenanted real estate), and life cos active on long-tenor government-tenanted leases. Pricing competitive on stabilized DoD-tenanted assets due to top-tier tenant credit; wider on contractor-tenanted sub-tier deals.
Sources
- NAIOP Research Foundation: Industrial Space Demand Forecast · NAIOP Research Foundation · 2026-Q1
- Current Employment Statistics: State & Metro Employment · U.S. Bureau of Labor Statistics · monthly
- Senior Loan Officer Opinion Survey on Bank Lending Practices (SLOOS) · Board of Governors of the Federal Reserve System · 2026-Q1