What a CRE Bridge Loan Is
A commercial bridge loan is short-term financing used to bridge a property from one stage to another—acquisition to stabilization, repositioning to refinance, or vacancy to leased operations.
Why Banks Often Decline Transitional CRE
Banks prefer stabilized income and predictable performance. Transitional CRE—vacancy, deferred maintenance, tenant rollover, or operational improvements—introduces uncertainty that often falls outside bank underwriting.
Typical Characteristics
- Duration: commonly 6–24 months
- Underwriting: asset-based, focused on downside
- Structure: flexible, but disciplined
- Requirement: a credible exit strategy
Common Use Cases
- Acquiring a partially vacant property
- Funding lease-up and stabilization
- Repositioning an underperforming asset
- Time-sensitive acquisitions and closings
How Lenders Think About Risk
Private lenders typically evaluate (1) collateral quality, (2) sponsor capability, and (3) exit probability. The goal is not optimism; it is verification.
Exit Strategy: The Non-Negotiable
Bridge financing works when the exit is structured from day one. Common exits include sale, refinance into permanent debt, or refinance into DSCR once stabilized. Lenders will test feasibility, timing, and market liquidity.
How to Improve Execution Certainty
- Provide a clear plan: lease-up strategy, improvements, tenant strategy
- Support assumptions with comps and realistic timelines
- Be conservative on leverage
- Present professional documentation (rent roll, trailing numbers, scope, budgets)
Quiet conclusion: CRE bridge loans are an execution tool. When the plan is disciplined and the exit is credible, private capital can bridge the gap banks are not designed to cover.