Tag Archives: Refinancing

Opportunity Zone Project Stabilizes

What Happens After an Opportunity Zone Project Stabilizes?

by: Adam Horowitz

Stabilization Is Not the Finish Line

Many Opportunity Zone developers treat stabilization as the main goal.

Construction is complete. Leasing is established. The asset begins producing income. From the outside, the project may look like it has reached the finish line.

But for many sponsors, stabilization creates the next major decision point.

The sponsor now has to determine how the asset should be capitalized, who should remain in the ownership structure, whether permanent financing is available, and whether investors need liquidity.

For Opportunity Zone projects, stabilization is not the end of the strategy. It is the moment when the next capital decision begins.

A Stabilized Asset Does Not Automatically Have a Solved Capital Stack

Stabilization reduces development risk, but it does not automatically solve the capital structure.

A project may still have construction debt, bridge debt, or other short-term financing that needs to be replaced. The asset may need permanent financing, capital improvements, debt paydown, reserves, or a recapitalization. Investors may also have different goals after the project is complete.

Some investors may want to remain in the asset for the long-term Opportunity Zone strategy. Others may want liquidity. The developer may want to exit, stay involved, or reduce exposure while preserving some upside.

That means stabilization does not only mark the end of construction. It can also expose the next capital structure question.

Why Post-Stabilization Planning Matters More for OZ Projects

Opportunity Zone projects are different from ordinary multifamily developments because the ownership structure may be tied to tax timing, investor requirements, and long-term hold goals.

A sponsor may need to consider whether OZ investors remain in the asset, whether non-OZ investors need to be bought out, whether the developer stays in the deal, and whether the capital stack supports the intended hold strategy.

A simple refinance or sale may not always solve the problem.

The right answer depends on the asset, the investors, the debt position, and the long-term strategy. For OZ sponsors, the post-stabilization decision is not only about the real estate. It is also about the structure around the real estate.

Permanent Financing May Be the First Step

After stabilization, many sponsors look to permanent financing as the next step.

Permanent financing may help replace construction debt, lower risk, extend the hold period, and create a more stable capital structure. It can be an important part of moving the asset from development to long-term ownership.

But permanent financing may not solve every need.

The new loan may not be large enough to fully pay off existing debt. The asset may need more operating history. The lender may size proceeds conservatively. The sponsor may still need capital for improvements, reserves, investor liquidity, or debt paydown.

In those situations, refinancing may be part of the answer, but not the whole answer.

Stabilization Can Create an Investor Liquidity Moment

Once an Opportunity Zone project stabilizes, the ownership group may need to be reorganized.

Some investors may want to continue holding the asset. Others may want to exit. Non-OZ investors may have different timing needs than OZ investors. The developer may want to remain involved, but not necessarily in the same position as during construction.

This can create several possible paths.

The sponsor may pursue a full sale, partial sale, preferred equity, structured equity, recapitalization, investor buyout, developer buyout, or long-term hold with permanent financing.

The important point is that stabilization gives the sponsor a clearer basis for making those decisions. The asset has operating performance. The value is easier to underwrite. The capital needs are more visible.

Where Forward Purchase Structures Can Fit

A forward purchase structure can help define what happens after the asset stabilizes before the project reaches that point.

Instead of waiting until completion to find a buyer or capital partner, the sponsor can create a future transaction framework earlier in the process.

At stabilization, the asset can be valued based on stabilized fair market value. The forward structure can then allow for different outcomes, such as a full purchase by a long-term capital partner, a partial purchase where the developer remains involved, a buyout of non-OZ investors, or a transition into a longer-term stabilized ownership structure.

The value of a forward purchase is not only the future acquisition. It is the certainty it can create before stabilization.

For developers, that certainty can support planning, investor conversations, and the transition from construction to long-term ownership.

The Right Solution Depends on the Asset

Forward purchase structures are one possible solution, but they are not the only one.

Depending on the project, the sponsor may consider permanent refinancing, preferred equity, structured equity, mezzanine capital, debt paydown capital, recapitalization, partial sale, full sale, developer buyout, or investor buyout.

The right capital solution should match the asset’s operating profile, the investor base, the debt position, and the long-term Opportunity Zone strategy.

For some projects, the best path may be a refinance. For others, it may be a forward purchase structure. For others, it may be preferred equity or a broader recapitalization.

The key is to build the plan before the sponsor is forced into a narrow set of options.

How Lever Can Help

Lever Capital Partners helps Opportunity Zone sponsors evaluate what happens after stabilization.

That includes reviewing permanent financing options, debt paydown needs, preferred equity, recapitalization strategies, forward purchase structures, and investor liquidity considerations.

Lever can help sponsors compare available paths, prepare the capital story, and connect with capital providers that understand Opportunity Zone multifamily, stabilized assets, and the transition from development to long-term ownership.

For sponsors, the goal is not just to reach stabilization. The goal is to make sure the capital structure is ready for what comes next.

The Bottom Line

An Opportunity Zone project may be built, leased, and operating, but that does not mean the capital strategy is complete.

After stabilization, sponsors still need to decide how the asset will be financed, who will remain in the deal, whether investors need liquidity, and whether the ownership structure supports the long-term OZ strategy.

For OZ sponsors, stabilization is not just the end of development. It is the beginning of the next capital decision.

When Existing OZ Multifamily Assets Need More Than a Refinance

by: Adam Horowitz

A Refinance Is Not Always Enough

For many Opportunity Zone multifamily owners, stabilization creates a natural next step: refinance the asset, pay off the existing debt, and move into a longer-term ownership plan.

But in today’s market, that next step is not always simple.

An asset may be occupied, income-producing, and performing well, but the refinance may still fall short. The new loan may not generate enough proceeds to fully pay off existing debt. It may not leave room for capital improvements. It may not create the flexibility needed to support a long-term hold.

That is the issue facing some existing OZ multifamily assets today.

The question is not always whether the property can refinance. The better question is whether the refinance is enough.

Stabilized Does Not Mean Refinance-Ready

Stabilization reduces risk, but it does not guarantee a clean refinance.

A lender may still size the loan conservatively based on current income, debt service coverage, appraised value, market conditions, and interest rate assumptions. Even if the property is performing, the lender may not offer enough proceeds to solve the full capital need.

This can be frustrating for sponsors because the asset may have done what it was supposed to do. Construction is complete. Lease-up is in place. The property has operating history. But the capital markets may have changed since the original financing was put in place.

Higher rates, tighter underwriting, and lower leverage can make the new loan smaller than expected.

In that situation, the asset may be stable, but the capital stack may still be under pressure.

The Debt Market May Not Match the Sponsor’s Need

A refinance usually has to solve several problems at once.

The sponsor may need to retire existing debt, reduce financing costs, extend the hold period, fund remaining improvements, build reserves, and preserve the Opportunity Zone ownership strategy.

But the lender is usually focused on a narrower question: how much senior debt can the asset support today?

That difference matters.

The sponsor may need a broader capital solution than senior debt alone can provide. If the refinance proceeds are not enough, the remaining gap still has to be addressed. The sponsor may need to bring in additional capital, negotiate with the existing lender, restructure the capital stack, or consider a more flexible financing solution.

A refinance problem can quickly become a capital stack problem.

Why OZ Ownership Makes the Decision More Complex

Opportunity Zone multifamily assets are different from ordinary refinance situations because timing and ownership structure matter.

A sponsor may not want to sell too early. Investors may be focused on preserving long-term OZ benefits. The ownership group may want to hold the asset through the required period, but the existing capital stack may not fully support that plan.

That can make the lowest-cost capital solution less important than the best-fit capital solution.

For an OZ asset, the goal is not only to replace one loan with another. The goal is to create a structure that supports the asset, the investors, and the long-term strategy.

If a refinance does not provide enough proceeds, the sponsor needs to evaluate what capital can solve the shortfall without disrupting the broader plan.

When Preferred Equity Becomes Relevant

Preferred equity can become relevant when senior debt does not stretch far enough.

It may help pay down existing debt, reduce leverage pressure, fund capital improvements, support operational needs, or create more flexibility for the sponsor. It can also provide an alternative to selling the asset or raising more dilutive common equity.

This does not mean preferred equity is the right answer for every deal.

The asset still needs to support the cost of the capital. The sponsor still needs a clear use of proceeds. The ownership group still needs a realistic plan for the next phase of the investment.

But when the refinance alone cannot solve the problem, preferred equity can help fill the space between what the lender will provide and what the asset actually needs.

How Lever Can Help

Lever Capital Partners helps sponsors evaluate whether an existing OZ multifamily asset needs more than a refinance.

That includes reviewing the current debt, estimating refinance capacity, identifying the shortfall, evaluating preferred equity or recapitalization options, and positioning the opportunity for capital providers that understand stabilized multifamily and Opportunity Zone structures.

For sponsors, the goal is not just to replace one loan with another. The goal is to build a capital structure that supports the asset’s next phase.

Lever can help sponsors compare options, prepare the capital story, and connect with capital sources aligned with the asset, timeline, and ownership strategy.

The Bottom Line

Existing OZ multifamily assets may still be strong investments, but today’s lending market can limit what a refinance can accomplish.

If senior debt proceeds do not fully address the payoff, improvements, reserves, or long-term ownership plan, sponsors may need a broader capital solution.

For OZ multifamily owners, the question is not only whether the asset can refinance. It is whether the refinance gives the asset enough room to move forward.

The Capital Gap Facing Stabilized Opportunity Zone Multifamily Assets

The Capital Gap Facing Stabilized Opportunity Zone Multifamily Assets

by: Adam Horowitz

Stabilization Can Reveal a New Problem

For many Opportunity Zone multifamily projects, stabilization is treated as the finish line. Construction is complete, leasing has progressed, and the asset begins to look more like an operating property than a development project.

But stabilization can also reveal a different problem.

The property may be finished, occupied, and generating income, but the capital stack may not match the asset’s next phase. The sponsor may still have construction debt, bridge debt, expensive financing, delayed improvements, or investor obligations that need to be addressed.

This is the capital gap many stabilized Opportunity Zone multifamily assets are facing.

It is not always a question of whether the property works. Often, the question is whether the financing still works.

The Gap Is Not Always Obvious From the Outside

A stabilized asset can look healthy from the outside. Occupancy may be strong. The building may be open. Rents may be coming in. The sponsor may have executed the development plan.

But the balance sheet can tell a more complicated story.

A loan may need to be paid down before the asset can secure better permanent financing. A refinance may produce less capital than expected. A lender may underwrite more conservatively than the sponsor assumed. Capital improvements may still be needed to protect rents or improve operations. Existing investors may need liquidity, but the sponsor may not want to sell.

That is why stabilization does not always mean the deal is fully capitalized.

It only means the asset has moved into a new phase.

Why the Gap Appears After Completion

Many Opportunity Zone projects were planned under assumptions that may have changed by the time the asset stabilized.

A sponsor may have started the project when rates were lower, valuations were stronger, debt proceeds were more available, or exit assumptions were easier to defend. By the time the project is completed and leased, the market may require a different capital structure.

That creates a mismatch between the original plan and the current market.

The existing loan balance may be too high for today’s refinance proceeds. The property may need more operating history before a lender gives full value. The sponsor may need to fund improvements before the asset reaches its full income potential. The ownership group may want to hold long term, but the current capital structure may be too short-term or too expensive.

The asset may have succeeded operationally, but the capital stack may still need to be reset.

Why This Matters More for OZ Assets

Opportunity Zone assets have an added layer of complexity because ownership timing matters.

In a typical multifamily project, a sponsor may choose to sell, refinance, or recapitalize based mainly on market conditions. In an Opportunity Zone project, the decision may also involve tax timing, Qualified Opportunity Fund structures, investor hold periods, and the desire to preserve long-term OZ benefits.

That can make a forced sale less attractive.

If the property is stabilized but the capital stack is under pressure, the sponsor may need a solution that creates liquidity or reduces debt without disrupting the broader OZ strategy.

The wrong capital decision can affect more than the balance sheet. It can affect the long-term ownership plan.

The Real Question Is the Size of the Gap

Before choosing a solution, sponsors need to understand the gap clearly.

That means comparing the current debt balance against realistic refinance proceeds. It means reviewing current NOI, occupancy, valuation, lender requirements, and any remaining capital needs. It also means separating short-term pressure from long-term asset quality.

A sponsor may not need a full recapitalization. They may need a smaller amount of capital to pay down debt, complete improvements, or create enough flexibility to reach a better permanent financing outcome.

The capital gap should be measured before it is solved.

How Lever Can Help

Lever Capital Partners helps sponsors evaluate the capital gap facing stabilized Opportunity Zone multifamily assets.

That can include reviewing the current debt position, estimating refinance capacity, identifying paydown needs, evaluating capital improvement requirements, and determining which capital sources may fit the situation.

For sponsors, the goal is not simply to raise more money. The goal is to understand the exact problem inside the capital stack and match it with the right capital solution.

Lever can help sponsors prepare the capital story, compare available options, and connect with capital providers that understand stabilized multifamily assets and Opportunity Zone structures.

The Bottom Line

A stabilized Opportunity Zone multifamily asset may have moved beyond development risk, but that does not mean the capital structure is complete.

The project may be built. The units may be leased. The income may be real. But if the debt, equity, and long-term ownership strategy do not align, the sponsor may still face a capital gap.

For OZ sponsors, stabilization is not only the end of construction. It is the moment when the capital stack needs to be tested again.

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

by: Adam Horowitz

A Loan Can Mature Before the Capital Stack Is Ready

Many CRE owners are not dealing with a broken property. They are dealing with a broken capital structure.

A property may still be occupied, generating income, and performing close to plan. But when the loan matures, the refinance may not produce enough proceeds to pay off the existing debt. That creates a difficult situation for sponsors: the asset may still be working, but the capital stack no longer clears.

This is becoming a common issue in today’s commercial real estate market. Higher rates, tighter underwriting, lower valuations, and more conservative lender assumptions are reducing refinance proceeds across many deals.

The problem is simple: the loan is due, but the new loan is not large enough to take it out.

A Performing Property Does Not Guarantee a Full Refinance

In the past, many sponsors assumed that if a property was performing, the loan would refinance. That assumption is no longer safe.

Performance still matters, but lender proceeds are based on today’s underwriting, not yesterday’s loan terms. A property that supported a certain loan amount three or five years ago may not support the same amount today.

Lenders are looking closely at debt service coverage, interest rates, valuation, cash flow stability, asset class risk, and market conditions. Even if the property is not distressed, the refinance may still come in short.

This is especially true for loans originated during a lower-rate environment. Many of those loans were sized when debt was cheaper, values were higher, and exit assumptions were more forgiving. Today, the same property may support less debt, even if operations have not materially declined.

The Refinance Math Has Changed

The refinance shortfall is often a math problem.

If interest rates are higher, the property’s income may not support the same loan amount. If cap rates have moved, the appraised value may be lower. If lenders are more cautious, they may reduce leverage or require more cushion.

For example, a sponsor may have a $40 million loan maturing, but the best refinance option only produces $33 million. That creates a $7 million gap.

That gap does not disappear just because the property is performing. It has to be solved.

The sponsor may need to bring in fresh equity, negotiate an extension, add preferred equity, consider mezzanine debt, restructure the deal, or explore a sale. In some cases, the existing lender may be willing to work with the sponsor. In other cases, the lender may expect the borrower to solve the shortfall before maturity.

The Asset May Be Fine, But the Payoff Still Has to Clear

This is one of the most important distinctions in the current market.

A refinance problem is not always a property problem. Sometimes the asset is doing what it was supposed to do, but the original capital stack was built for a different market.

A deal may have assumed cheaper permanent debt. It may have expected stronger valuations. It may have relied on a sale or refinance that no longer pencils under current conditions.

That is why performing assets can still face pressure at maturity. The issue is not always occupancy, rent collection, or asset quality. The issue is whether the deal can support enough new debt to repay the old debt.

Sponsors Should Address the Gap Early

Sponsors should not wait until the final months before maturity to understand the problem.

The earlier the refinance gap is identified, the more options the sponsor has. That means reviewing the current payoff, estimating likely refinance proceeds, testing debt service coverage under current rates, reviewing extension rights, evaluating lender flexibility, and identifying whether gap capital may be needed.

Waiting too long can reduce negotiating leverage and limit available capital options.

How Lever Can Help

Lever Capital Partners helps sponsors evaluate refinance risk before maturity and identify solutions when new loan proceeds do not fully clear the existing debt.

That can include sourcing refinance options, identifying preferred equity or mezzanine capital, negotiating with lenders, or structuring fresh equity to bridge the gap.

For sponsors facing a maturity issue, the question is not just, “Can we refinance?”

The better question is: what capital structure gives the deal the highest probability of surviving the maturity and moving forward?

Lever can help sponsors pressure-test the refinance, understand the size of the gap, and connect with capital providers aligned with the asset, timeline, and risk profile.

The Bottom Line

A maturing CRE loan is no longer just a debt event. It is a capital structure test.

The property may still be performing, but if refinance proceeds do not clear the existing payoff, the sponsor needs a plan. That plan may involve new debt, gap equity, preferred equity, lender negotiation, or a broader restructuring.

The asset may still be working. But if the capital stack does not refinance, the deal needs a new structure.

2026 CRE Refinancing: Why Capital Availability Is No Longer Enough

by: Jack Moskow

Entering 2026, capital has returned to commercial real estate, but it is being deployed much more selectively than in prior cycles. Banks, life insurance companies, agencies, and private credit lenders are still active, yet the market is no longer rewarding broad risk-taking the way it did when rates were near historic lows. Today, lenders are focused on asset quality, sponsorship strength, income durability, and the borrower’s ability to support the capital stack under current underwriting standards. In this environment, the issue is not simply whether liquidity exists. The real question is whether a property’s basis and structure can support a refinance or transaction.

For many owners and developers, this has changed the financing conversation. A few years ago, borrowers could often focus mainly on pricing, proceeds, and execution speed. Now, the conversation is shifting from “What’s the rate?” to “How do we rebuild the capital stack?” Higher borrowing costs, with stabilized assets still seeing rates in roughly the 5.5%–6% range combined with lower valuations and more conservative lender sizing, have made structure just as important as liquidity. Even if capital is available, it may not be available at the leverage level needed to refinance an existing loan or support the original acquisition basis.

Liquidity is available, but it is selective.Stabilized multifamily, industrial, and grocery-anchored retail assets with strong cash flow continue to attract lender interest. Experienced sponsors with proven track records are also better positioned to access capital. However, assets with weaker fundamentals, uncertain leasing, or business plans that depend heavily on future rent growth are facing more scrutiny.

The bigger challenge is the refinancing gap created by loans originated during the low-rate environment. Between 2019 and 2022, many properties were financed at 70–75% loan-to-value, often with interest rates below 4%. As those loans mature, borrowers are now facing a very different lending environment.

Today, lenders are sizing closer to 50–60% loan-to-value placing more weight on debt yield, debt service coverage, and downside protection. As a result, new senior loan proceeds may fall well short of the existing debt balance.

That gap can create serious pressure for owners. A property may still be performing, but if the new senior loan cannot cover the maturing debt, the sponsor must find additional capital. In many cases, senior debt alone is no longer enough. This is where capital stack restructuring becomes essential. Mezzanine debt, preferred equity, joint venture equity, and other structured solutions can help bridge the gap between lender proceeds and the asset’s existing basis.

For owners who still believe in the long-term value of their assets, this type of structuring can be the difference between preserving ownership and being forced to sell at an unfavorable time. Layered capital can provide flexibility, help complete a refinance, and allow sponsors to hold through a difficult part of the cycle. However, these solutions need to be structured carefully. The wrong capital partner or an overly expensive structure can create new problems instead of solving the original one.

Lever Capital Partners helps sponsors navigate this environment by identifying the right financing solution for each asset and situation. In a market where basis increasingly determines liquidity, Lever works with borrowers to assess the gap, evaluate available capital sources, and structure the appropriate mix of senior debt, mezzanine financing, and preferred equity.

By leveraging relationships across banks, life insurance companies, agencies, and private credit lenders, Lever Capital Partners helps clients access capital that fits today’s underwriting standards. The goal is not just to find a loan, but to build a capital stack that can close, support the asset, and preserve long-term value. In 2026, surviving the refinancing cycle will depend less on whether capital exists and more on whether sponsors can structure around today’s reality. 

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.

$2 Trillion Maturity Wall: Navigating the Coming Refinancing Wave

by: Adam Horowitz

Over the next 18 months, nearly $2 trillion in CRE loans are scheduled to mature across the country. What’s emerging is a defining challenge, and opportunity, for both borrowers and lenders: a refinancing wall that demands creative capital solutions.

Many of these loans were originated during the low-rate era between 2019 and 2021, when abundant liquidity and compressed cap rates fueled aggressive underwriting. Today, high interest rates, lower valuations, and cautious lending have converged to make refinancing increasingly difficult. The result is a market-wide repricing cycle that’s testing every part of the capital stack.

A Market at a Crossroads

Rising rates have eroded property values and debt service coverage ratios across most major asset classes. In certain markets, valuations are down 20-40% from peak levels, making full refinancing at par nearly impossible.

Traditional lenders, particularly regional and community banks, are tightening exposure and prioritizing renewals over new originations. Meanwhile, private credit and debt funds are stepping in to capture market share, often providing flexible bridge or structured debt where banks have pulled back.

This shift has turned the capital markets landscape into a dual-track system: institutional lenders remain selective, while private capital is driving most of the transaction flow. For borrowers, this means navigating a more fragmented market, one where relationships, credibility, and creative structuring matter more than ever.

The Borrower’s Challenge

For many owners, the refinancing wall represents a squeeze between valuations and debt capacity. Properties with stable income but lower appraised values can’t support their existing loan balances under today’s higher rates.

Lenders are increasingly offering short-term extensions, partial paydowns, or structured modifications to buy time, but these solutions often come with tighter loan covenants and higher pricing. For others, the answer lies in bringing new capital to the table through pref equity, mezz, or JV recaps.

From Crisis to Opportunity

Behind the headlines of distress lies a more dynamic reality, a market flush with capital seeking yield and structure. Opportunistic investors and funds are actively targeting recapitalization opportunities rather than foreclosures.

Sponsors willing to engage early and restructure intelligently can position their assets for long-term stability, or even expansion. Creative refinancing strategies, executed with the right capital partner, can transform a maturity problem into a value creation moment.

How Lever Capital Partners Can Help

At Lever Capital Partners, we specialize in helping clients navigate complex refinancing and recapitalization scenarios through a combination of market insight, capital relationships, and structuring expertise.

  • Creative Refinancing Solutions – We arrange bridge loans, mezzanine financing, and preferred equity to help borrowers close the refinancing gap without losing control of their assets.
  • Access to Active Capital Sources – Our relationships span private credit funds, institutional lenders, and family offices seeking exposure to well-structured CRE debt opportunities.
  • Strategic Advisory on Extensions & Recaps – We guide sponsors through loan modifications, extensions, and partial paydowns, preserving flexibility and ownership.
  • Capital Stack Optimization – From senior debt to equity, we design tailored capital stacks that align with each project’s cash flow, risk profile, and long-term vision.
  • Market Intelligence & Positioning – Our team provides real-time insight into lender sentiment, spreads, and underwriting criteria, ensuring each client’s financing package stands out.

Turning the Wall into a Window

The coming refinancing wave will separate reactive borrowers from strategic ones. Those who act early, communicate transparently with lenders, and engage experienced capital advisors can transform pressure into opportunity.

For Lever Capital Partners and our clients, this $2 trillion maturity wall represents not a dead end, but a window into the next cycle of innovation, partnership, and long-term value creation in commercial real estate.