Restructure Debt on Your Commercial Real Estate Portfolio Using Private Credit Solutions

When Traditional Lenders Won’t Bend: Why Private Credit Might Be Your Lifeline

You’ve built a portfolio of income-generating office buildings, retail centers, and multifamily projects—but now your lenders are tightening terms, looming maturities are approaching, and your properties feel like anchors dragging you under. Ever found yourself typing “restructure commercial real estate debt private credit” into Google, desperate for options beyond the bank’s refinance limits? This isn’t just another refinancing exercise; it’s a chance to breathe again, to pull your balance sheet back from the brink, and to give yourself time to stabilize or enhance asset value without selling core assets at a discount.

Private credit providers—those non-bank lenders who specialize in bespoke solutions—understand the unique challenges you face. They can restructure existing mortgages, provide junior or mezzanine tranches, or even offer bridge facilities to tide you over until asset values recover. In this guide, we’ll walk through the signs you need debt restructuring, key private credit options, the step-by-step process to restructure, and how Financely’s platform can connect you to lenders who’ll back you when banks won’t.

1. Signs You Need to Restructure Your CRE Debt

Before exploring solutions, recognize the warning flags:

• Loan Maturities Looming with No Refinance in Sight: If your existing 75% LTV mortgage matures in six months, and banks are balking at current valuations—perhaps because cap rates spiked—then you’re hiking uphill without boots.
• Negative Cash Flow Drags: Vacancy spikes, unexpected capital expenditures, or rising interest rates can turn a once-stable property into a cash burner. When you search “stabilize commercial property with private mezzanine loan,” it’s usually after a few months of negative NOI.
• Protecting Apprehensive Equity: Selling assets at distress pricing isn’t appealing. Many type “avoid forced property sale restructure debt” when they’d rather retain ownership and ride out a market slump.
• Restrictions on Bank Refinance Terms: Your lender might demand too much equity or impose covenants that hamper operations. If bank appraisals are 15–20% below current debt, you need an alternative path.
• Expensive Current Interest Rates Without Flexibility: A fixed 7% mortgage on stabilized retail might be fine, but if floating LIBOR-based rates rose to 8.5%, that drag can kill cash flow. Private lenders can swap you into a 5–6% fixed structure for a period to stabilize debt service.

Spot these red flags early, and you’ll avoid scrambling for last-minute solutions. Private credit gives breathing room—search “private credit interim financing for CRE restructuring” to see how sponsors gain runway.

2. Private Credit Solutions for Restructuring CRE Debt

2.1. Senior Bridge Loans and Extension Facilities

If your current mortgage is due but valuations haven’t recovered, a senior bridge loan can refinance that debt on a short-term basis—often 12–24 months—while you fix occupancy or complete renovations. Common search terms include “bridge loan to refinance maturing CRE mortgage” and “extension loan for office building.” These facilities typically offer:

• Loan-to-Value (LTV) up to 65% on As-Is Value: Even if a bank stuck to 50% LTV, private bridge lenders might push to 60–65%, based on short-term exit plans.
• Interest-Only Payments: Keeps cash flow unburdened so you can focus on leasing or repositioning.
• Flexible Covenants: Instead of rigid DSCR requirements, some private lenders accept a post-stabilization DSCR of 1.1×–1.2×, allowing for interim loose cash flow covenants.

2.2. Mezzanine Debt & Preferred Equity Structures

When senior lenders demand too much equity injection, mezzanine debt jumps in as a junior layer—often unsecured or secured by an equity pledge. Key features:

• Subordinate Position: Behind the first mortgage, but ahead of sponsor equity. Search “mezzanine financing for CRE portfolio recap” to see how sponsors fill the 10–15% LTV gap.
• Interest Rates of 8–12%: Higher than senior but far below property sale or forced refinance costs. A blended cost of capital can be lower than liquidation options.
• Flexible Amortization: Often interest-only until exit or maturity, aligning with cash flow improvements.

2.3. Recapitalization with Joint Venture Equity Partners

Sometimes the answer is more equity. By selling a 20–30% JV stake to a private credit fund or family office, you can inject new capital, pay down senior debt, and position the asset for long-term hold. Look up “JV equity recapitalization for CRE portfolio” to find partners willing to co-invest. Sponsors maintain control, share upside, and reduce leverage in one step.

2.4. Cash Flow Sweeps & Waterfall Refinancing

Some private lenders allow you to refinance into a structured debt package where any excess cash flow beyond a specified DSCR percentage is swept into a reserve to pay down principal faster. Type “cash flow sweep debt restructuring CRE” to see how this tool accelerates deleveraging without raising the specter of distressed sale.

3. Step-by-Step Process to Restructure via Private Credit

Let’s break down how to navigate this process—from initial outreach to closing:

3.1. Engage an Advisor or Use a Centralized Platform

If you’ve ever searched “private credit lenders for CRE restructuring,” you know the challenge of cold-calling dozens of funds. Our platform consolidates those connections: one application, multiple quotes. Advisors help package your deal—collecting three years of audited statements, rent rolls, lien searches, and a detailed pro forma projecting stabilized NOI.

3.2. Prepare a Detailed Restructuring Proposal

The proposal should include:

• Current Loan Terms & Maturity Dates: Show existing interest rates, covenants, and the precise maturity timeline. Searching “CRE debt maturity recapitalization proposal” reveals lenders need clarity on upcoming deadlines.
• Property Performance Metrics: Historical occupancy rates, NOI trends, expense details, and sales comps to justify current valuations. Underwriters look for “underwriting CRE debt restructure with property NOI history.”
• Proposed New Capital Stack: Clearly outline senior bridge, mezzanine layers, and any equity cushions. Phrases like “proforma capital stack after restructuring” let lenders evaluate risk tiers quickly.
• Stabilization Plan & Timeline: If occupancy is at 75%, show marketing strategies, budget for TI allowances, and expected timeline to 90–95%. Lenders want “stabilization plan for repositioning office asset.”
• Cash Flow Projections & DSCR Analysis: Include worst-case and base-case DSCR, demonstrating 1.15x–1.2x under conservative rents—search “stress-tested DSCR for CRE debt restructuring.”

3.3. Distribute to Private Credit Partners

Once your package is complete, upload it to our portal under “apply for CRE debt restructuring private credit.” Our network routes the package to:

• Direct lending funds specializing in CRE bridge and mezzanine
• Family offices with appetite for cash flow financing
• Hedge funds and credit funds offering flexible structures

Expect term sheets within 5–7 days if your deal aligns with their underwriting criteria. Each sheet will detail interest rates, covenants, LTV/DSCR requirements, and any origination or exit fees. Keywords like “term sheet for CRE recapitalization” often appear in these communications.

3.4. Underwriting & Due Diligence

Lenders conduct:

• Property Valuation Review: They might order a new appraisal—search “approval process private credit appraisal for CRE debt restructure.” If existing appraisals are recent and credible, they may accept those.
• Title & Environmental Checks: Confirm no hidden liens or contamination risk. These are often the last items that can stall a deal—rarely do you find “environmental due diligence delay private CRE restructure” as a welcome headline.
• Cash Flow Audit: Review rent rolls and expense invoices to verify projected NOI. Underwriters verify “actual rent rolls vs. proforma in CRE debt restructure.”
• Sponsor & Management Team Assessment: Lenders call references and check track record. A stable driver team, especially one that has navigated downturns, makes or breaks the deal.

Stay on top of these requests—slow responses can push your lenders elsewhere. Quick document delivery can shave days off this stage.

3.5. Negotiate Final Terms & Execute Documentation

When you receive a final term sheet—often called a commitment letter—it spells out:

• Revised interest rate and amortization schedule
• Loan-to-value and debt service coverage covenants
• Prepayment penalties or step-down premiums
• Collateral specifics—e.g., first mortgage vs. second lien
• Conditions precedent: updated appraisal, executed loan documents, title policies

Focus on negotiating any onerous covenants—if they require a 1.35× DSCR but your stabilization plan peaks at 1.25×, push back or propose a quarterly DSCR review with step-in rights. Searches for “negotiate DSCR covenant private credit” yield examples of how sponsors navigate these discussions.

3.6. Closing & Funding

Once conditions are met—updated appraisal, executed mortgages, and borrower equity contributions—funding occurs. The new loan often pays off the existing bank debt in full. Then you have:

• A bridge facility or term mortgage with a new maturity 12–24 months out
• Mezzanine note behind it, if applicable
• Release of cash reserves or escrow held during due diligence

Your balance sheet transforms from “stuck in unfavourable bank covenants” to “stabilized on private credit terms designed for turnaround.” You’ll likely pay an origination fee—usually 1.0–2.0% of loan amount—and interest begins immediately. Once everything’s wired and recorded, you can focus on executing your operational plan without the spectral pressure of imminent bank maturity looming overhead.

4. Common Pitfalls & How to Avoid Them

• Overly Aggressive Valuations: If you base your restructure on peak market comps that lenders deem unrealistic, they’ll trim your LTV—search “lender rejects CRE restructure due to inflated appraisal” to see how quickly deals falter.
• Weak Stabilization Plan: Vague projections or lack of pre-leasing commitments can torpedo your credibility. Always have lease extensions or letters of intent “underwrite CRE debt restructure with pre-leasing LOIs” so lenders see minimised rollover risk.
• Ignoring Cash Flow Seasonality: Some retail malls see spikes during holidays; office buildings have slower summer months. If you ignore seasonality—“seasonal cash flow modeling for CRE debt restructure”—your DSCR can look worse than it is.
• Delays in Due Diligence Deliverables: Slow or incomplete documents can push lenders to back away. Anticipate what they’ll ask—title endorsements, compliance certificates—and deliver promptly.
• No Contingency Reserves: Not setting aside capital for unexpected TI, leasing commissions, or expense overruns leads to “cash flow squeezes during turnaround,” derailing even well-structured plans.

By anticipating these issues—using conservative appraisals, securing pre-leasing commitments, modeling seasonality, and maintaining reserves—you’ll present a more robust case than your peers. That’s why folks search “best practices for CRE debt restructuring on private credit” and find this guide helpful.

5. Why Financely’s Platform Simplifies CRE Debt Restructuring

Instead of calling ten direct lenders and guessing which one is comfortable with your asset type, Financely’s platform gives you:

• A Curated Network of Private Credit Providers: From mezzanine funds to bridge lenders to opportunistic debt funds, all in one spot. No more “search private credit fund for CRE recap.”
• Underwriting Support & Modeling Assistance: Our experts review your financials, stress-test assumptions, and help refine your stabilization plan. That’s why searches for “underwrite CRE debt restructure” often end up here.
• One-Time Application & Multiple Term Sheets: Submit once, compare “term sheet for debt restructure” side by side, and pick the best fit—no more spreadsheet of emails.
• Legal & Document Coordination: We connect you with counsel experienced in CRE debt amendments, ensuring your new loan documents align with your restructuring objectives.
• Fast Track to Funding: Our streamlined process often cuts 30–45 days off traditional bridge lender timelines—critical when maturity clocks are ticking.

If you’ve been stuck searching “private lender for CRE loan restructure,” let Financely guide you from application to funding, ensuring you secure the capital and flexibility required to stabilize and enhance your portfolio.