Real Estate Bridge Loans
A real estate bridge loan is a short-term loan given to a borrower until permanent, long-term financing of a "stabilized" commercial property becomes viable in the marketplace. This normally happens when the real estate is either repositioned or renovated to become stabilized as a viable income-producing property. Kirksley can help lead you through the bridge loan financing process to get your real estate transition project completed with success.
More Information about Real Estate Bridge Loans
A real estate bridge loan is needed when a property is in distress or in some other kind of transition and therefore unable to qualify for conventional long-term financing due to current levels of risk. A new owner intends to successfully transition the property into a "stabilized" financial situation but needs time to do so. The transition scenario can be highly variable but here are some common examples:
non-stabilized assets: commercial property in need of light or heavy renovations currently with insufficient rental income to attract new tenants and reach full occupancy
distressed or time-sensitive challenges: stalled construction, bankruptcy, foreclosure, 1031 exchange, bank workouts, etc
Bridge loans for real estate are typically 1 to 3 years in term with interest only payments and lower loan-to value ratios at 50-70% of the disposition value of the property. This requires a sizeable cash injection by the buyer (recipient of the bridge loan) who usually must have some track record of repositioning or managing commercial real estate as well as considerable net worth.
Loan amounts on real estate bridge loans can range from $1M to as much as $100M. International real estate is also in scope for bridge loan funding with the guidance of Kirksley.
Bridge Loan Financing Types
Types of commercial property for which bridge loan financing may be available if in a transitional or distressed stage: