Commercial Bridge Loans: When the 90-Day Gap Costs You the Deal
Bridge debt is the most expensive form of CRE financing — and often the only way to capture a deal. The math works when the exit is real, the carrying cost is bounded, and the alternative is losing the property to a faster buyer.
Typical pricing
9–13% interest-only, 2–3 points origination, 12–24 month term with extension options. LTV up to 75% on stabilized assets, 65% on value-add. Recourse or non-recourse depending on sponsor strength.
Use case 1: Fast acquisition
Property hits market at a discount; seller wants 30-day close. No bank can underwrite that fast. Bridge funds in 2–3 weeks, you take title, refinance to a permanent loan 9–18 months later.
Use case 2: Value-add buyout
Buying an underperforming property to reposition. Bank wants stabilized DSCR — the property doesn't have it yet. Bridge carries you through reposition, perm refi takes you out once NOI hits underwriting.
Use case 3: CMBS maturity gap
Existing CMBS matures; new perm loan needs 90 days. Bridge covers the gap to avoid maturity default.
Use case 4: 1031 exchange
Identification clock running out. Bridge funds the upleg purchase; you exit via permanent loan once exchange completes.
The exit is everything
Underwrite the perm refi BEFORE you sign the bridge. If perm pricing has moved 100bps or LTV won't support payoff, you're in trouble. Always model a 'bridge gets extended' scenario at higher rates.
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