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Commercial real estate owners roll bridge loans as borrowing costs rise
Fitch said the industry has bundled $31.6 billion of bridge loans into CRE collateralized loan obligations through August, setting up a refinancing test as rates stay high.
Commercial real estate owners that locked in loans when money was cheap are extending their time by taking another short-term bridge loan, according to Bisnow. The approach involves paying higher rates now to keep properties eligible for later refinancing, but it also leaves borrowers more exposed as borrowing costs continue to climb.
Bisnow notes that U.S. landlords struggling to secure permanent financing are rolling one floating-rate bridge loan into the next, including moving properties within and across pools of securitized loans, Fitch Ratings said in August. The strategy depends on long-term rates falling before lenders become less willing to extend maturities.
Bisnow links the pressure to recent rate and Treasury moves, saying the Federal Reserve raised rates in September for the first time since 2023 and the 10-year Treasury yield reached 5.31% Monday, its highest level in more than 20 years.
The outlet also cited Fitch data that through August, bridge-to-bridge loans were bundled into bonds known as CRE collateralized loan obligations totaling $31.6 billion this year, exceeding activity levels in 2025 and putting 2024 on pace for the busiest year since 2021.