Quick question for the commercial investors/sponsors in here
Lender · Washington, DC · Member since 2026 · 2 posts · 0 votes
Are you seeing local banks stick to strict 60–65% LTV caps on your commercial refinances right now?
Over the last 60 days, we've seen regional banks pull back significantly on debt-service coverage ratios (DSCR) for multi-family, industrial and retail properties especially for deals sitting in that $1M to $10M range.
Many sponsors are finding themselves stuck between:
🛑 Bringing cash to the table at refi (cash-in refinance).
🛑 Accepting high-cost short-term bridge extensions.
🛑 Looking at private credit / debt funds to bridge the LTV gap.
For anyone currently holding maturing commercial debt in 2026/2027: What is your main pivot strategy right now? Are you taking bank terms, bringing in preferred equity, or shopping alternative private debt?
(P.S. If you’re trying to price out a current deal or work around a tight bank DSCR requirement, shoot me a DM with your basic numbers. Happy to run a quick, no-pressure soft-quote or review term sheets with you!)
Get ahead of the maturity date while you still have leverrage, not after it forces your hand. At 60 to 65% LTV you have room if the DSCR holds, but a lender will price the risk very differently once you are up against the clock. An extension buys time and costs fees, a refi locks in today's terms. I am a licensed broker in Sacramento, DRE #02085666, and I manage 100+ Airbnb properties. Hope this helps, DM me if you want to talk through it.
Marcus, Noah, the weak assumption is treating 60-65% LTV as the constraint. It is not. DSCR and debt yield are. At a 6.5% coupon, 30-year amort, the debt constant is about 7.58%. A 1.25x DSCR floor caps the loan at NOI/(1.25 x 7.58%) = 10.55x NOI. At a 6.5% cap that is 68.6% LTV; at a 7.5% coupon, constant about 8.39%, the same cap gives 62.0% LTV. The bank cap is DSCR wearing an LTV mask. Most regional banks now impose a 9.5-10% debt yield floor, which is often tighter than LTV.
Noah, "room if DSCR holds" is exactly where sponsors get trapped. If retail is underwritten at 95% occupancy, flat rollover, and no TI/LC, you are overstating NOI by 8-12%. Add 5% vacancy, 3% credit loss, $15-25/sf TI, 3-5% LC, and 5-7% capex reserve. At 1.25x DSCR, every $1 of NOI supports about $10.55 of debt at 6.5%, so an 8% NOI miss is an 8% proceeds cut. On a $10M asset, that is $600K-$800K of cash-in before reserves and fees.
LTC vs LTARV is the second trap. A 65% LTC on a 7.5% coupon can be 75% LTARV after S-curve carry. Lease-up and carry are not linear; they front-load cash before NOI. Horizontal infra per pad is the same math: fixed spend before revenue.
Marcus, what is the actual debt yield and 1.25x DSCR proceeds gap on your $1M-$10M maturities, not the quoted LTV?
OP. Your PS looks like you're fishing for business as a lender. But I will still respond to your basic question as an investor.
You mentioned Local and then regional banks. Just so we are on the same page.
The banks I deal with have a Federal Lending Cap of $1.3mm up to $30mm depending on the bank. What are the Federal Lending Limits for the size of banks you are wanting to reference? $100mm to $500mm???? Do they have too much large Commercial loans out already, waiting to default? I believe your answer will be different based on the size and type of bank.
Is the investor a sound repeat customer or someone with no ties to the lender, fishing for a low rate, low downpayment loan?
At $1mm to $10mm loan the investors personal finances and personal guarantee come into play. Does the investor have $100,000 or $5mm of net worth?
Investor Track record????
We have long-term history with our banks, don't shop for cheapest rates, go for the relationship, have strong 10 year full cycle investment track records with our banks, have personal financial backing.
With the above said.
A. One bank offered us 7 year balloon term versus normal 5 years without us asking. I had told him I am looking to lock in longer terms and that was one of his solutions.
B. Our current deal is a $570k addition. Going for zero down versus normal 25% downpayment. Will cross collateralize with the existing property with the same lenders.
C. This same lender we are doing a Construction Loan for about 3 months. Then closing into an Additional SBA loan with them as the local bank. Having them roll in $700k of working line into this permanent loan, which they will. Again, using Cross Collateralization with zero downpayment.
D. This same lender we are asking for 1% point lower than their normal trade rate they would give us. If we move $x dollars of Cash equivalent investments into their bank with their access control over. They have done this in the past for us, and they will probably do this again.
Point- it is more about the investor than the lender.
Folks make your lender part of your team.
I think the first question is whether the property still supports the debt at today's rates, not whether you can find a lender willing to stretch the LTV. If the refinance requires bringing a lot of cash to the table, I'd compare that against extending the existing loan or bringing in equity. Sometimes the best move is simply to hold the property longer and let NOI catch up rather than forcing a refinance that doesn't make sense.