Northmarq closes $45M permanent loan on Kentucky bourbon campus

The takeout that never makes headlines looks like this: Northmarq has closed $45 million of permanent debt on The Blending House, a 108-acre bourbon storage and blending campus in Shelby County, Kentucky, replacing the construction financing with a seven-year fixed-rate loan placed through the firm's relationship with MetLife Agricultural Finance. Randall Waddell, a senior vice president in Northmarq's Louisville office, finalized the financing for the borrower, a venture between The Koetter Group and The Spirits Group, at 1917 Vigo Road.

Behind the takeout is a set of post-distillation functions sold as infrastructure rather than as a distillery's own business: seven rickhouses built around The Koetter Group's K-RAX barrel storage system and a 33,500-square-foot blending and bottling building, together more than 95% leased, covering maturation, bulk whiskey sourcing, blending, bottling, and back-office support for third-party spirits brands. Because the brands are tenants rather than the sponsor's own label, the income reads as contract rent on leased industrial space: the collateral is the buildings and the rack system, the credit is occupancy, and no one has to underwrite how well a particular whiskey sells, which Waddell described as the strength of a “highly specialized, substantially leased asset.”

The seven-year term separates this from the rest of the debt market's recovery plays, because life companies will commit long on industrial cash flow and stay short on hotels still proving their rate: a barrel warehouse at 95% occupancy takes seven years fixed while Peachtree's $62.5 million refinancing of Graduate Nashville runs three years with two one-year options, the three-plus-two structure Peachtree used in Nashville.

This is the version this publication has argued for: construction debt giving way to permanent money, maturities rolled and refinanced rather than repriced through distress. The rescue capital being raised across the market is for the assets that cannot produce a takeout of their own.

The easy version of this trade is now done — completed campus, contract rent, a life company holding seven years. The informative print will be the next barrel-storage project that reaches completion with space still unleased: if that one also earns a permanent fixed-rate loan, Kentucky's spirits infrastructure has a debt market, and if it goes back to the banks, the seven-year term on The Blending House was about one campus's tenant roster.