Competition for bridge loans among lenders is fierce, resulting in lower spreads and better structure for borrowers. The timing of the availability of bridge loans is perfect. Why? Many borrowers are working to re-stabilize property cash flows post-pandemic before locking in larger fixed-rate CMBS loans; they need the flexible prepayment options that bridge loans offer.
Historically, bridge loans have been a good fit for unstabilized properties and/or properties that have yet to achieve their greatest value. Bridge loans allow the property, when stabilized, to be refinanced into a permanent loan without incurring substantial prepayment penalties. Often, the prepayment penalty on a bridge loan is completely waived if the loan is refinanced into a permanent CMBS conduit loan. Most bridge loans are non-recourse (no personal guarantees). Currently, bridge loan demand by lenders is driven by a potentially record-setting Commercial Loan Obligation (CLO) issuance market (see next article).
ValueXpress provides bridge loans options beginning at $5 million, secured by all the CMBS-eligible asset classes, including multifamily, manufactured housing community, retail, office, industrial, hotels and self-storage properties. Bridge loans typically have a 2- to 5-year term, are interest-only, 65%-70% LTV and are priced at 300-600 basis points over 30-day LIBOR, resulting in interest rates of 3%-6%.
ValueXpress has provided many bridge loans for its clients. Please contact Michael Sneden (firstname.lastname@example.org) or Gary Unkel (email@example.com) for a free bridge loan quote for your property.