Commercial bridge and construction loans
Debt-fund and bank capital for assets that do not yet support permanent financing: acquisitions that need to close now, lease up and repositioning plays, partner buyouts, and ground up commercial development.
Who this is for
Sponsors buying assets that are not stabilized, executing a capital plan, or building from the ground up at a size beyond our own balance sheet. Value-add multifamily acquisitions, a half-leased industrial park, a center being re-tenanted after an anchor departure, a partner buyout that has to close on a deadline, a ground up development.
Cost basis, not value
Transitional lending is sized against total project cost, purchase price plus capital expenditure plus soft costs plus carry, and then tested against as-stabilized value. Both tests apply and the lower controls, which is why a deal with an aggressive purchase price can pass the cost test and fail the value test.
Pricing is floating, typically over a short term index with a floor, plus origination and exit fees. On a two-year hold those fees are a real part of the cost, and comparing bridge quotes on rate alone will mislead you every time. We compare them on all in cost over your actual expected hold, which is the only comparison that means anything.
What we need to quote
- The business plan, with a budget and a schedule
- Current rent roll and trailing twelve months, if there is any income
- Stabilized pro forma, with the comparables supporting your rent assumptions
- Purchase contract or current debt and payoff
- Construction: plans, permit status, GC contract, and the feasibility study
- Sponsor financial statement, track record on this exact business plan, and liquidity
- Your intended exit, and roughly when
Bridge and construction questions
When is this better than our own balance sheet?
Above roughly $5MM, and whenever the deal needs structure our direct program does not offer, non recourse, a large future-funding facility for tenant improvements and leasing commissions, or a three year term with extensions. Below $5MM and fast, our own capital is usually quicker and cheaper all in once you count third-party costs. We will tell you which side of that line you are on.
How does future funding work?
The loan has two parts: initial funding at closing, and a committed facility drawn later for capital expenditure, tenant improvements, leasing commissions or interest carry. You pay interest only on what is drawn, and there is usually an unused-commitment fee. It is what lets a repositioning deal fund its own business plan without a capital call every quarter.
What do lenders want to see on a repositioning?
A business plan with arithmetic behind it. Specifically: what you are spending, on what, over what schedule; what rents you expect afterward and which comparable properties support them; how long lease up takes; and what the stabilized asset is worth. Then they stress all of it, longer lease up, softer rents, wider exit cap, and size to what survives. Bring the stressed case yourself and you will be taken more seriously.
Is the exit really underwritten before funding?
By any competent lender, yes, and by us always. A bridge loan is a bet that a specific takeout will exist at a specific size on a specific date. We size the agency, CMBS or bank refinance at conservative assumptions before recommending the bridge. If the takeout does not cover the bridge under reasonable stress, the deal needs more equity or a different plan, and finding that out now is worth a great deal.
Can you do mezzanine or preferred equity?
Yes, on deals of sufficient size and quality. Mezzanine debt and preferred equity fill the gap between senior debt proceeds and the sponsor’s equity, at a cost between the two. They are legitimate tools and they are expensive; the right question is always whether the incremental proceeds earn more than they cost, after accounting for the control rights the capital brings with it.
What about ground up commercial?
Financeable with an experienced sponsor, permits in hand, a guaranteed maximum price contract from a credible general contractor, and meaningful pre-leasing on most product types. Industrial and multifamily are the easiest conversations right now; speculative office is the hardest. Feasibility, cost certainty and pre-leasing are the three levers that move terms.
Every deal gets a real answer
Tell us the property, the plan and the number you need. A credit officer reads it and tells you what it will support.
- Texas hard money. A term sheet from the people who fund the loan.
- Commercial, all 50 states. Quotes from the desks that cover your asset.
- Outside the box? A straight reason, and usually a name that does fund it.