Bridge Financing for Commercial Real Estate

Bridge underwriting does not start with the stabilized value. It starts with the risk the lender is taking today and whether that risk resolves within the loan term. Cornovus Capital underwrites each transaction against the following before engaging any capital partner:

• Business plan credibility: Is the renovation scope, lease-up timeline, or repositioning strategy realistic given the asset's condition, market dynamics, and sponsor experience?
• Liquidity durability: Does the sponsor have sufficient reserves to carry the asset through construction delays, lease-up variance, or an extended hold without a lender event of default?
• Exit path viability: Is the permanent financing takeout — CMBS, Agency, LifeCo, HUD, or sale — achievable at the projected stabilized value, and does the bridge term provide enough runway to reach it?
• Debt yield and DSCR at exit: What does the stabilized cash flow support at the permanent lender's underwriting standards, and does the bridge loan size fit within that constraint?
• Interest reserve adequacy: Is the funded interest reserve sized to carry debt service through the full projected transition period, including a reasonable buffer?
• Lender appetite: Which capital partners are actively deploying into this asset class, geography, and risk profile at the current leverage and rate parameters?

Cornovus Capital builds the underwriting package before any capital partner sees the transaction. Each transaction is matched to one pre-qualified capital partner. Cornovus Capital does not shop deals.

The most common reason bridge financing stalls is not credit quality. It is a capital structure built around the entry rather than the exit. Sponsors approach the bridge market with a renovation budget and a pro forma. Lenders underwrite the exit. When those two frameworks do not align, the deal does not close — or it closes at terms that create refinance risk at the takeout.

Cornovus Capital structures every bridge engagement exit-first. That means sizing leverage to what the permanent lender will underwrite at stabilization, not to the maximum the bridge lender will extend today. It means building an interest reserve that survives a realistic delay scenario, not a best-case timeline. And it means selecting a bridge capital partner whose term, extension provisions, and covenant structure match the actual complexity of the business plan.

Common exit paths Cornovus Capital underwrites and structures toward include CMBS conduit, Agency multifamily, HUD permanent financing, LifeCo long-term fixed-rate debt, conventional bank takeout, and asset sale. Each exit has different stabilization thresholds, underwriting standards, and timing requirements that must be embedded in the bridge capital structure from day one.

Most bridge financing failures are structural, not credit. The asset qualifies. The sponsor qualifies. The transaction fails because the capital structure was assembled around assumptions rather than underwriting. Common patterns Cornovus Capital identifies before engaging capital partners:

• Leverage sized to the pro forma, not the exit: The bridge loan is at 80% of cost. The permanent lender will underwrite 65% of stabilized value. The gap is a refinance problem embedded in the original structure.
• Interest reserve undersized: The reserve covers 12 months. The renovation and lease-up realistically takes 18. The sponsor is in a default conversation before stabilization.
• Exit path not underwritten at entry: The business plan assumes CMBS permanent financing. The stabilized DSCR supports 55% LTV at CMBS underwriting standards. The bridge is at 75% LTC. Those numbers do not reconcile.
• Bridge term too short for the business plan: A 12-month bridge on a gut renovation and full lease-up is not a bridge. It is a maturity default waiting to happen.
• Lender selection mismatched to asset risk: Debt funds, banks, and insurance companies have materially different risk tolerances, covenant structures, and extension provisions. Placing a complex transitional asset with a lender whose credit box does not fit creates friction at every decision point through the hold period.

Cornovus Capital identifies these structural mismatches before underwriting is complete. The capital structure that reaches a lender is built to execute, not to get a term sheet.

Cornovus Capital manages the full bridge engagement from initial underwriting through closing execution. The process is structured to deliver certainty of execution, not a collection of term sheets for the sponsor to evaluate.

• Initial underwriting: Cornovus Capital evaluates the transaction against business plan credibility, liquidity durability, exit path viability, and lender appetite before any capital partner is engaged. Transactions that do not underwrite do not proceed.
• Capital structure analysis: Leverage, term, interest reserve sizing, and extension provisions are structured around the specific exit path and business plan timeline, not generic bridge parameters.
• Capital partner selection: Cornovus Capital selects one pre-qualified capital partner matched to the transaction's credit profile, asset class, geography, and risk tolerance. Deals are not shopped.
• Term negotiation: Cornovus Capital negotiates loan terms, covenant structure, extension provisions, draw mechanics, and closing conditions on behalf of the sponsor.
• Closing execution: Cornovus Capital coordinates third-party diligence, lender requirements, and closing logistics from term sheet through funding, ensuring transparency and execution certainty throughout.

Bridge transactions under active engagement typically close 10 to 30 days from executed term sheet, subject to third-party diligence completion and lender documentation requirements.