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MIAMI—Bridge financing is making headlines these days—and it's not all big deals. Small—and sometimes extremely small—bridge loans are closing.

GlobeSt.com caught up with Steven Fischler, co-founder and principal of New Gables Capital, to discuss this trend. What is behind the growing need for bridge financing under the $15 million mark?

Fischler told GlobeSt.com there has always been a need for smaller bridge loans. The difference today, he says, is non-bank bridge lenders have raised very large amounts of capital, which requires them to deploy funds at a larger clip in a finite period of time.

“As such, focusing on $10 million dollar loans isn't an efficient use of their time or balance sheet,” Fischler says. “So they look for larger deals.”

Find out how Motorola Park is navigating lending challenges. Click here.

Fischler points to several types of examples of where bridge loans under $15 million may be needed. First, some CMBS loans are maturing and do not meet today's more conservative underwriting criteria and require additional equity to refinance.

“The borrower may need a bridge loan to lease up or renovate their property before being able to get another 10-year loan,” he explains. “In this case, the bridge loan is an intermediary step.”

Another example involves the hospitality industry. Every six to seven years, he notes, larger hotel franchisors like Hilton, Hyatt and Marriott must be renovated. Fischler says owners may take out a bridge loan for the renovation before stabilizing the hotel performance and placing long term financing on the hotel.

Fischler's third example is related to cost overruns on developments that are near completion. While this is not a traditional bridge loan, he says, it's something we are doing more and more of. (How are capital markets gurus responding to rising interest rates? Find out here.)

“This typically applies to projects that are 80%-plus completed but are already over-budget,” Fischler says. “In order to finish the project, developers are asking for mezzanine financing on a short-term basis to fill the gap. From our standpoint, we like these loans because a lot of the risk has typically been removed at this point. If it's for sale product, most units are already under contract and therefore construction and sales risks are mitigated. This applies to retail, office and industrial properties as well when most of the property is pre-leased.”

MIAMI—Bridge financing is making headlines these days—and it's not all big deals. Small—and sometimes extremely small—bridge loans are closing.

GlobeSt.com caught up with Steven Fischler, co-founder and principal of New Gables Capital, to discuss this trend. What is behind the growing need for bridge financing under the $15 million mark?

“As such, focusing on $10 million dollar loans isn't an efficient use of their time or balance sheet,” Fischler says. “So they look for larger deals.”

Find out how Motorola Park is navigating lending challenges. Click here.

Instant Insights /

The Growing Need for Bridge Financing Under the $15M Mark

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