Tag Archives: CapitalStack

When a CRE Loan Matures and the Refinance Doesn’t Clear the Existing Debt

by: Adam Horowitz

Most borrowers coming into maturity today expected to refinance. What they’re realizing is that the refinance doesn’t clear the loan.

Across the deals we’re seeing, it’s not a question of whether debt is available. It’s that the new loan is coming in materially below the existing balance. That gap is what’s driving decisions right now.

According to industry data from groups like the Mortgage Bankers Association and Trepp, over $1.5 trillion of U.S. commercial real estate debt is maturing between 2025 and 2027. Much of that was originated in a very different environment. That’s the backdrop for what’s happening today. In this environment, working with us at Lever Capital Partners can help borrowers understand where their deal actually stands and what options are realistically on the table.

This Isn’t a Rate Problem, It’s a Proceeds Problem

Higher rates are part of the story, but they’re not the core issue.

What has changed more meaningfully is how loans are being sized. Lenders are underwriting to higher debt yields, lower leverage, and actual in-place cash flow. There is less reliance on projected growth, and more emphasis on where the deal stands today.

The result is straightforward. Even when a property is performing, it often doesn’t support the same loan proceeds it did a few years ago. We are consistently seeing situations where the new loan comes in 10 to 25 percent below the existing balance. That is where deals start to break.

This is not a liquidity issue. Capital is still there. It is a structure issue.

A Lot of These Deals Only Worked in One Environment

Many of the loans coming due today were structured between 2020 and 2022, when leverage was higher, rates were lower, and underwriting gave more credit to future rent growth.

Take those assumptions away, and the structure does not hold the same way.

That does not mean the asset failed. In many cases, the property is stable and performing. The issue is that the original capital stack was built around conditions that no longer exist.

Where the Pressure Shows Up

The pressure point is simple. The existing loan balance is higher than what the market will refinance today.

That gap forces decisions.

In some cases, it is driven purely by leverage. In others, it is a combination of rate movement, flat values, and underwriting discipline. For deals that were already thinly capitalized, there is very little room to absorb that shift.

What we are seeing more frequently is that sponsors are not dealing with an operational problem. They are dealing with a capital structure that no longer works.

What Sponsors Are Actually Doing

At this point, most borrowers are not choosing between ideal outcomes. They are choosing how to manage the gap.

Some are writing checks to complete a cash-in refinance and protect their basis. Others are bringing in preferred equity or mezzanine capital, not as an optimization, but as a way to get the deal closed. That comes with a higher cost of capital and a different risk profile.

There are also situations where the numbers simply do not justify putting more money into the deal. In those cases, the conversation shifts toward a recapitalization, a sale, or stepping away entirely.

There is no clean solution once the gap shows up. There are only trade-offs.

What Lenders Are Actually Doing

Lenders are still active, but the approach is more disciplined.

They are sizing to current performance, not future expectations. They are more focused on downside protection, and less willing to stretch to make a deal fit a prior capital structure. Extensions are happening, but they are no longer automatic and almost always come with conditions.

The assumption that every loan refinances has been removed from the market.

What This Looks Like in Practice

A deal financed in 2021 at around 70 percent leverage reaches maturity today. Under current underwriting, that same asset might support something closer to the mid-50s to low-60s range, depending on the asset and market.

That difference creates the gap.

At that point, the borrower is not deciding whether to refinance. They are deciding how to solve the shortfall, whether that means adding capital, restructuring the deal, or exiting.

What Matters Now

The sponsors navigating this best are the ones getting in front of it early.

That means running realistic refinance scenarios, understanding where proceeds will land, and identifying the gap before time becomes a constraint. The biggest mistake we see is treating maturity like a formality instead of what it has become, which is a capital event.

This is where we typically come in, helping sponsors quantify that gap, understand how lenders are actually sizing deals today, and structure solutions that reflect current market conditions rather than past assumptions.

Final Thought

Loan maturity used to be routine.

Today, it is where the capital stack gets exposed.

The deals that get through this cycle are not the ones with the best story. They are the ones where the structure works under today’s constraints.

$1.8 Trillion of CRE Debt Is Coming Due. Here’s How Deals Are Actually Getting Refinanced in 2026

by: Adam Horowitz

Over $1.5 trillion to $1.8 trillion in U.S. commercial real estate debt is set to mature between 2026 and 2027, according to industry estimates from the Mortgage Bankers Association and Trepp. Much of this debt was originated in a very different environment, characterized by lower interest rates, higher leverage, and more aggressive underwriting. Today, the landscape has shifted. Refinancing is no longer a routine process. It has become one of the most critical strategic decisions sponsors face. In this environment, working with experienced capital advisors like us at Lever Capital Partners can help sponsors navigate changing lender expectations and structure deals that are positioned to close.

This is not simply a rate issue. It is a structural one.

Why Refinancing Is More Difficult Today

Higher interest rates continue to pressure debt service coverage ratios, reducing loan proceeds even for otherwise stable assets. Many loans that were originated in the 3–4% rate environment are now refinancing into 6–8%+ rates, significantly impacting cash flow and loan sizing.

At the same time, lenders are more selective. Leverage levels have come down, credit boxes have tightened, and underwriting assumptions are more conservative.

In many cases, asset values have not kept pace with these changes. As a result, loans that were once comfortably sized at 70–75% loan-to-value are now being underwritten closer to 55–65%. The outcome is a growing disconnect between existing loan balances and what new lenders are willing to provide.

The Refinancing Gap Is Now the Central Challenge

This disconnect has created what many are calling the refinancing gap. Even high-quality assets with strong sponsorship are facing situations where senior debt alone cannot take out the existing loan.

Sponsors are left with a limited set of options. They can contribute additional equity, sell into a potentially unfavorable market, or restructure the capital stack to bridge the difference. Increasingly, the third option is becoming the most practical path forward.

How Deals Are Actually Getting Done

In 2026, refinancing is less about replacing a loan and more about rebuilding the capital stack.

Sponsors are combining senior debt with mezzanine financing or preferred equity to close proceeds gaps. Stretch senior loans and structured debt solutions are also gaining traction, particularly for assets with strong fundamentals but temporary constraints.

For transitional properties, bridge-to-permanent strategies are being used to buy time and improve loan sizing at stabilization.

These approaches reflect a broader shift in the market, where debt funds and alternative lenders now account for a significant share of new CRE lending activity, stepping in where traditional banks have pulled back.

What Lenders Are Prioritizing

Lenders today are focused on durability and downside protection. Strong, stable cash flow remains the primary driver of loan sizing.

Debt yields have moved meaningfully higher, with many lenders targeting 8–10%+ debt yields, reinforcing the shift toward lower leverage and more conservative structures.

Conservative underwriting, realistic business plans, and clear exit strategies are essential.

Sponsor quality also matters more than ever. Liquidity, experience, and the ability to navigate complexity all play into lender confidence. Perhaps most importantly, lenders are prioritizing structure. Deals that are thoughtfully assembled and aligned with current risk parameters are far more likely to close than those chasing maximum leverage.

Execution certainty has become more valuable than headline pricing.

Timing Is Now a Strategic Advantage

In this environment, timing is not just a logistical consideration. It is a strategic one. Sponsors who begin the refinancing process early have more flexibility to explore different capital options and structure the deal appropriately.

Waiting too long often results in limited choices and reactive decisions. In a market where structure determines outcome, time has become one of the most important forms of leverage.

Where Lever Capital Partners Helps

Refinancing today requires more than simply finding a lender. It requires aligning the right mix of capital with the realities of the deal.

At Lever Capital Partners, we work with sponsors to source and structure that capital. By accessing a broad network of banks, life companies, debt funds, mezzanine lenders, and preferred equity providers, Lever helps bridge refinancing gaps and position transactions for execution. Equally important, we translate complex situations into clear, financeable structures that lenders are willing to support.

Refinancing Is Now a Strategy

The upcoming wave of maturities will test even experienced sponsors. The difference between preserving value and losing it will often come down to how well the capital stack is designed.

In today’s market, refinancing is no longer a transaction. It is a strategy.

Industrial and Multifamily Still Dominate, But Here’s Where Real Opportunity Is Hiding in CRE Right Now

by: Adam Horowitz

Industrial and multifamily continue to lead U.S. commercial real estate investment in early 2026. Lenders understand these asset classes, capital is available, and long-term demand drivers remain intact. But as more capital crowds into the same trades, pricing tightens and real opportunity becomes harder to find.

Today, the most compelling opportunities are not disappearing. They are simply hiding in places where capital is more selective, underwriting is more complex, and financing requires a smarter approach. This is where experienced capital advisors like Lever Capital Partners help sponsors navigate complexity, structure the right capital stack, and connect deals with lenders that can actually execute.

Why Industrial and Multifamily Still Attract Capital

Industrial and multifamily remain the default choices for a reason. Both asset classes offer durable demand, relatively predictable cash flow, and deep lender familiarity. Even after several volatile years, lenders are comfortable underwriting these properties, especially in strong markets with experienced sponsors.

That comfort, however, comes with a tradeoff. Competition has increased, leverage has compressed, and investors often face lower upside unless they are buying distressed or operating at scale. For many sponsors, the challenge is no longer finding capital. It is finding returns.

Where Capital Is Quietly Shifting in 2026

As investors look beyond crowded trades, several less obvious sectors are gaining attention.

Last-mile logistics continues to benefit from e-commerce growth and delivery speed expectations. Cold storage is attracting interest as food supply chains and pharmaceutical distribution become more complex. Student housing is seeing renewed demand in supply-constrained university markets, particularly where enrollment remains strong and new construction is limited.

Medical office and life science adjacent assets are also drawing capital, especially properties tied to essential services rather than speculative lab development. Specialized residential strategies, including build-to-rent and workforce housing, are gaining traction as affordability pressures persist across major metros.

These sectors share a common theme. Demand is real, but financing is not straightforward.

The Financing Gap in Non-Traditional Assets

The biggest challenge in these emerging opportunities is not fundamentals. It is capital fit.

Many traditional banks struggle with limited comps, operational complexity, or non-standard lease structures. Debt funds may be interested, but pricing and structure vary widely. Deals often stall because the capital stack does not match the asset’s risk profile, even when the business plan is sound.

In today’s market, strong assets can fail to transact simply because they are paired with the wrong capital source.

What Capital Providers Want to See Now

In 2026, lenders and capital partners are less focused on aggressive projections and more focused on clarity and downside protection.

They want to see a clear operating story, conservative assumptions, and realistic exit planning. Sponsor experience matters, but so does the quality of operating partners. Capital providers are also paying close attention to structure, including reserves, covenants, and how risk is allocated across the stack.

Deals that succeed are designed for lender comfort, not maximum leverage.

How Smart Sponsors Are Getting These Deals Done

Sponsors closing deals in niche sectors are approaching financing strategically. Many are using blended capital stacks, combining senior debt with stretch components or preferred equity. Bridge-to-perm strategies remain common, especially where lease-up or operational improvements are required before stabilization.

Rather than forcing conventional debt onto unconventional assets, these sponsors are using structure to reduce perceived risk and increase execution certainty.

This is where experienced capital advisory becomes critical. Firms like Lever Capital Partners help sponsors translate complex asset stories into financeable transactions by matching each deal with the right mix of lenders, debt funds, and structured capital providers.

Finding Opportunity Where Capital Has Not Fully Arrived

The best CRE opportunities in 2026 are not always obvious. They exist in sectors with real demand but higher financing complexity. Investors who understand this dynamic and design their capital strategy accordingly gain a meaningful edge.

As industrial and multifamily remain crowded, the next wave of opportunity will belong to sponsors who can navigate nuance, structure intelligently, and execute with certainty. In today’s market, capital strategy is no longer a back-office function. It is a competitive advantage.