Most of those types Pension Funds, Insurance Companies are investing with REIT's.The institutional money typically only invest with the whales for what they tend to perceive as ultimate security and low risk.I talk to REIT's all the time looking for off market properties for my clients.

(even though I have been paying more then the regular payment for a year).

I would also look at ways to stagger the lease maturities so they are not all turning over the same year.I would want to try and secure these tenants for 10-20 years if I am building a new facility for them.

My goal is to have every one feel secure in the partnership while also avoiding any unnecessary fees like legal, if possible.

The listing looks like a regular sale and not a foreclosure or anything. 

And your concern is quite valid and smart looking into the future of possible refi issues.Are you being declined for regular home loans or is the rate just something higher than you hoped?

(this is not very likely because of your lack of experience and high LTV) This lender would be in a 2nd lien position and not very secure if you fail. 

I should have funding secured for the area I'm looking at in the LA area. 

If that is the case, then it is just a matter of getting a new HELOC in place and avoiding the higher rates of a real estate secured LOC. 

this option fee is NON refundable - i would recommend 3-5% of the purchase price -  if they currently have a security deposit (which i assume they would) then you can also convert that to part of their option fee when you redo the contract / agreement with them.