An alternative to conventional loans while interest rates stay high

Most conventional loans are tied in some way to Ten Year Treasuries, and as they go up, they raise interest rates - which are making it very difficult to refinance many commercial properties.

For perm loans of between 5 – 10 years, banks typically require a Debt Service Cover Ratio (DSCR) of between 1.25% - 1.4%, so as rates go up, the amount of available proceeds available for a refinance goes down.

That’s a tough pill to swallow….high rates coupled with RE investors needing to come out of pocket to refi their property. So in some cases, maybe it’s time for these property owners to consider a shorter term Bridge loan.

Bridge loan are definitely not cheap, but they are interest only loans that are not normally tied to Treasuries, so as conventional loans pricing goes up, short term Bridge loans pricing has stayed relatively stable – which makes the cost difference between Bridge and conventional loans smaller, and could help investors to pull more proceeds out.

Just as importantly, Bridge loans have either no pre payment penalty, (or a very short pre payment penalty), which will allow investors to refinance their property as soon as rates come down, which could prove a huge benefit as rates won’t stay at this level forever!

And as always, wherever rates go from here, please give us a chance to get you the very best conventional and Bridge financing programs for all your commercial RE needs, (i.e. Senior Debt, Preferred Equity, or Mezz debt).

And if you are buying or refinancing a commercial property and need to close fast, there are great options available, with some Bridge loan programs that can close within 2 weeks – 3 weeks! These programs even offer Capex money.

Please give us a call to see what rates and terms we can get for you.

Here is a snap shot of interest rates as of 1/22/25 and available LTVs:

Multi family –

·???????5.6% -6.75%

·???????75% - 80% LTV

Industrial –

·???????6.2% - 7.25%

·???????70% - 75% LTV

Retail / Office –

·???????6.75% - 7.8%

·???????65% - 70% LTV (75% LTV is possible with strong occupancy, strong tenants, densely populated areas and strong sponsors)

Bridge -

9% - 13% Interest Only (Stabilized and Construction)

Please give me a call to discuss your best options!

Thank you!?

Bob Beckman

Senior Finance Director | Philadelphia Tri-State Region

[email protected]

Mobile: +1 215 850 3422