Will bank finance based on scheduled income from pre-leased building?

I am about to put a 16,000 sqft retail neighborhood center under contract for $1.6 million with a 90 day "free look" period. It is a foreclosure that a small bank who is dangerously close to being placed in receivership owns and currently only has 1 out of 8 spots leased. Besides that 1 spot the rest of the inside of the building is a complete shell.
My question is, If i was able to get the rest of the building completely pre-leased up with market rents ($17psf) using strong NNN leases and strong tenants during the 90 day "free look" period could I then get the banks to loan money using an appraised value that included this new scheduled income?
For example, if I pre-leased up everything for $17psf x 16,000sqft that would equal $272,000. Out of that lets say bank aceepts $250,000 as the NOI. The market cap rate of 9% means an appraised value of $2,777,777. If LTV is 60% they would loan $1,666,666. Is this possible?
In Buying Property - Asked by Austin G. - Jun 4, 2011
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Answer(s)

Rob M.
Lender/Mortgage Broker
Houston, TX

This would have been easier a few years ago. Most lenders are headed away from "Pre-Leased" Pro-Forma income and sticking with historical data, sales comp or construction cost for values. A big problem with your scenario is you can't lease what you don't own or represent. I would take a look at absorption rates in the area also to see if a 90 day lease up is even possible. I have doubts that Allen, Texas is that hot of a retail market right now. In order to make it happen a lender would want leases with national clients occupying the center. Good luck with your efforts, unfortunately these are the cards we a dealt in 2011.

Jun 6, 2011
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Rob B.
Chandler, AZ

Austin...
Your thinking is good. Your timing is bad. In the current financial market, this kind of deal will likely require a hard-money loan, even if you are able to accomplish your proforma goals.
Onward and upward.... Rob Baird

Jun 14, 2011
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Dina C.
Broker/Agent
Overland Park, KS

My answer is yes and double yes. I think that if you can accomplish this, you become their hero. I am of course assuming that you are not talking about the 'now known to have very little value (never did, we just pretended and all involved seem to go along), LETTER OF INTENT. I could get a real lease with a real credit tenant financed all day long.

Jun 16, 2011
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