Bridge Loan to a Permanent or CMBS Takeout
This only works if the takeout is real. Named program, short list of what the asset still lacks, term that matches that list. It fails when the exit is that someone will bid later. That file is value-add or lease-up. Call it that. The value of this specific structure is timing, not optionality: it exists because a defined lender is not ready today, not because no lender has been chosen yet.
Terms sit on Bridge Loans. Takeout pages: permanent takeout and CMBS. Incoming paths include time-sensitive acquisition and construction that did not convert.
How This File Is Underwritten
The takeout box is the underwriting. Agency, life company, bank perm, and CMBS each have occupancy, DSCR, debt yield, reserve, and prepay rules. The bridge lender will ask which box and what is missing: occupancy two points short of the program, a rate lock that needs 60 days, an appraisal that will be stale, a lease that has not commenced, or a PSA that closed faster than perm process. A punch list with five open items reads very differently to a bridge lender than one with a single item and a firm date to resolve it.
The gap has to be specific. A year to stabilize is value-add or lease-up. A hundred and twenty days because the life company will not meet the PSA still belongs here. Vague language like “a few months to season” is treated the same as no gap at all until it is tied to a specific date or event.
Payoff of the current piece has to be possible. Prepay on a debt-fund loan, a construction completion test, or yield maintenance on the note being retired belongs in sources and uses on day one. A takeout that cannot pay off the bridge cleanly is not a takeout. Get the payoff figure in writing early, since an estimate that is wrong by even a few points can change how much bridge is actually needed.
Believe the program only if someone can describe it. “CMBS exit” on an office with a short WALT is not a program. Dual-track the takeout when you originate the bridge. Waiting until month 11 to introduce the perm lender is how these files miss the date. A one-line reference to a lender’s interest is not dual-tracking; an actual application moving in parallel is.
What Usually Binds
- Whether the takeout program is named and the missing items are finite
- Occupancy and NOI vs. that program’s tests, not vs. a generic 1.25x
- Bridge maturity vs. the takeout’s real clock, including appraisal and committee
- Prepay and extension cost if the takeout slips
- In-place coverage while you wait
- Incumbent lender cooperation if an intercreditor or payoff letter is required
What To Send First
- Current debt, rate, maturity, prepay, and who holds it
- Current T12 and rent roll
- Written takeout indication if you have one, or the exact program you are targeting
- Punch list of what is left to qualify
- Calendar: bridge close, takeout submission, expected takeout close
- Any conditions the takeout shop already flagged
When This Is The Wrong Product
No takeout: use value-add or lease-up. Asset already fits perm and the date is not the problem: skip the bridge and go to permanent or rate-and-term refinance. Construction still vertical: stay on construction-to-permanent or finish the building. A two-year “bridge to perm” with no program and a heavy capex list is value-add with a hopeful label.
FAQs
Should we apply to the takeout lender now?
Yes, if perm or CMBS is the plan. Dual-track is how you avoid a bridge with nowhere to go.
Can CMBS take out a debt-fund bridge?
Yes, when the asset fits the conduit box. That is a CMBS vs. bank or life choice.
How short should this bridge be?
As short as the takeout clock plus margin. A two-year piece with a 90-day takeout story is a different product.
What if the takeout declines after the bridge closes?
You have a bridge with no exit. Name the program and the missing items in the first package so that outcome is less likely.
Does the bridge lender need to approve of the takeout lender?
Not formally, but a bridge lender who has never heard of the intended takeout shop, or who has concerns about that program’s reliability, may price the file differently. Naming a credible, active takeout lender strengthens the package.
Does the same lender have to do both pieces?
No. Same-lender construction-to-perm is a different structure. This bridge is often two lenders and a payoff.