Bridge loans provide short-term financing for transitional commercial real estate assets. Explore market analysis, deal structures, and lending trends from our advisory team.
A bridge loan is short-term financing (typically 12 to 36 months) used to "bridge" the gap between a property's current condition and permanent financing. Bridge loans fund acquisitions, renovations, lease-up, and recapitalizations for properties that don't yet qualify for long-term debt. They feature floating rates, flexible prepayment, and faster closings than permanent loans.
Bridge loan interest rates typically range from SOFR + 300 to SOFR + 600 basis points, depending on leverage, property type, sponsor experience, and market conditions. Origination fees are usually 0.50% to 1.50% of the loan amount. Rate caps may be required for floating-rate loans, adding to the total cost of capital.
Bridge loans typically offer up to 75-80% loan-to-value (LTV) and up to 85-90% loan-to-cost (LTC) for value-add and construction projects. Higher leverage is available through mezzanine debt or preferred equity layered on top of senior bridge debt, potentially reaching 90% or more of total project cost.