Bridge Financing for the purchase, refinance, or rehabilitation of self storage facilities.
Bridge Loans for Self-Storage Properties
Commercial bridge loans provide ideal temporary financing for investors seeking to rehab or reposition commercial properties. Often, these are properties that may not qualify for permanent financing or have short-term goals requiring short-term financing. Bridge financing is typically structured to account for capital expenditures, and — depending on the situation — they can also account for interest reserve and other reserves. Bridge financing for a commercial property is usually utilized to bring a property to stabilization for a sale or for recapitalization and permanent financing. In cases where a transition to permanent financing is preferred, the advisors at SelfStorage.Loan can assist in an easy shift to the most suitable financial mechanism for that situation.
2022 Commercial Mortgage Terms for Bridge Financing
Minimum Loan: $1 million
Term: 2 years (with extension options available)
Leverage: Up to 75% LTC (capped at 70% of the completed or stabilized value)
Amortization: Generally interest only
Recourse: Nonrecourse options available (with standard carve outs)
Prepayment: Generally none
Sources for bridge financing include:
Loan amounts are determined by total project cost or completed value and not necessarily on income in place or the as-is value (though the in-place income can help drive down interest rates).
Relatively fast closing process.
Easily executable when other credit options are inaccessible.
High costs if the reason behind the loan is a result of financial, legal, or credit issues.
Loans are short-term and generally need to be replaced within two years.