In today's LSCRE, I discuss the tricky financing landscape, focusing on the challenges of fixed and floating rate loans, debt service coverage ratios (DSCR), and bridge loans. Here are the key points:
Loans are impacted by volatile Treasury rates, making it difficult for buyers and sellers to agree on pricing.
Floating rate loans are sized based on SOFR, often resulting in lower leverage.
DSCR is a crucial metric for lenders, determining the loan amount based on the property's ability to service the debt.
Bridge loans offer more flexibility but come at a higher cost, often requiring a compelling business plan to justify the expense.
Navigating this puzzle requires a thoughtful, deal-by-deal approach to create value for investors. Stay tuned for more insights on this evolving financing landscape.
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