Bridge Loans Part 3: How Lenders Calculate Loan Proceeds Using As-Stabilized LTV
Bridge loans provide short-term financing for commercial real estate properties in transition, such as renovations or lease-ups, with the expectation of refinancing after stabilization. Randy Efron from Skylatus Property Capital explains how lenders determine loan proceeds based on projected future performance rather than current conditions.
As-Stabilized LTV: The Primary Loan Sizing Metric
Bridge lenders calculate the as-stabilized loan-to-value (LTV) ratio by dividing the loan amount by the property’s projected stabilized value:
As-Stabilized LTV=(Bridge Loan Amount)/(As-Stabilized Property Value)
Lenders target conservative LTVs to ensure the loan can be refinanced by permanent lenders (e.g., banks or CMBS) post-stabilization.
Property Type Impacts LTV Targets
Targets vary by asset class due to cash flow stability:
| Property Type | Typical As-Stabilized LTV | Reason |
|---|---|---|
| Multifamily | Up to 75% | Stable annual leases |
| Hotels | Around 65% | Volatile nightly bookings |
For example, if a local bank finances at 65% of as-is value, bridge lenders size loans accordingly against stabilized value.
Underwriting Process
Lenders and appraisers project stabilized NOI and value.
Metrics confirm refinance feasibility with stable-cash-flow lenders.
Higher leverage possible for value-add deals with strong business plans.
Contact Randy Efron at randy.efron@skylatus.com for bridge loan strategies at Skylatus Property Capital.
