Debt across the capital stack

Bridge debt exists to buy time. It funds an asset that is not yet ready for permanent financing — mid lease-up, mid renovation, recently acquired, or simply moving faster than a bank can approve.

• Typical term. 12 to 36 months, usually with extension options.
• Leverage. Commonly up to 75–80% of cost, depending on asset and sponsor.
• Trade-off. Priced above bank debt. You are paying for speed, certainty of execution and flexibility on the business plan.

The critical question with any bridge loan is the exit. Before we place one we want a credible path to sale or permanent debt within the term, and we underwrite the exit as carefully as the entry.

Hard money is underwritten primarily on the asset rather than the borrower. It is the right tool when credit history, entity structure, income documentation or timing rules out a conventional lender.

• Typical term. 6 to 24 months.
• Leverage. Lower than bridge, and driven by value rather than cost.
• Trade-off. The most expensive money on this page, and appropriately so. It is a solution for a defined problem over a defined period.

Used well — to close quickly on a genuinely good asset, then refinance out — it is a sound tool. Used to prop up a deal that does not work, it accelerates the damage. We will tell you which situation you are in.

Construction lending covers ground-up development, substantial rehabilitation, horizontal work and takeouts on projects that have stalled mid-build.

• Structure. Funded in draws against completed work, with inspections at each stage.
• Leverage. Commonly up to 75% of total cost, with the balance as sponsor equity.
• What lenders scrutinise. The budget, the contingency, the general contractor's track record and the sponsor's history completing comparable projects.

Mid-construction takeouts are their own category. When a project is half built and the original lender has stopped funding, the file needs a lender comfortable underwriting work in place and a realistic cost to complete. Those lenders exist, but there are not many of them.

For a stabilized asset with clean financials and a solid sponsor, conventional debt from a bank, credit union, life company, agency or CMBS lender will almost always be the cheapest option.

• Typical term. 5 to 30 years, fixed or floating.
• Requirements. Demonstrated occupancy and coverage, documented income, a sponsor with liquidity and net worth to match.
• Trade-off. Slower, more documentation and less flexibility on business plan changes.

If your asset qualifies for permanent debt, that is what we will pursue. Nobody should pay bridge pricing for a stabilized building.

Refinancing covers rate-and-term replacement, cash-out against created equity, and takeouts of maturing loans.

Maturity takeouts deserve particular attention. A loan coming due is a hard deadline, and borrowers who begin the process sixty days out negotiate from a far weaker position than those who begin six months out. Lenders can read urgency in a file and it shows up in the terms.

If you have a maturity inside the next twelve months, it is worth a conversation now even if you do nothing until later.

When senior debt does not reach the total capital required, subordinate capital can bridge the difference — either as mezzanine debt secured against the ownership interest, or as preferred equity sitting ahead of common equity in the waterfall.

It is expensive relative to senior debt and it comes with control provisions that need careful reading. But on a strong deal it is frequently cheaper than selling common equity, and it lets a sponsor retain upside they would otherwise give away.

These are structured case by case. If it is relevant to your transaction we will model it against the alternatives so you can see the actual cost.