Overview
Commercial Lending Solutions arranged $3,500,000 in bridge financing for the acquisition of a 12-unit multifamily property in Miami's Little Havana neighborhood. The deal required renovation-draw mechanics, an interest reserve, and a close timeline compressed enough to win a competitive bid process. None of that fits inside a conventional bank credit box, and the sponsor knew it. Getting this done meant finding the right lender category before we ever opened a term sheet conversation.
The Deal
The borrower was acquiring an older-vintage apartment building in Little Havana with the intention of executing a full unit-turn renovation strategy. The neighborhood sits in the direct spillover path of Brickell and Downtown Miami's continued densification, and the submarket has been appreciating faster than most of Miami proper. The acquisition basis was below replacement cost, and the plan was straightforward: buy it, fix it, stabilize it at market rents, then refinance into permanent debt once trailing cash flow supports agency or conventional underwriting.
The loan needed to accomplish three things simultaneously: fund the acquisition, carry a renovation draw facility for unit-by-unit capital work, and include an interest reserve sufficient to cover debt service through the lease-up period, since in-place cash flow at closing was thin by design. The borrower was not looking for a complicated structure. The deal itself made the structure complicated.
The Challenge
A 12-unit deal at $3,500,000 lands in an awkward position in the capital markets. It is too small for CMBS execution and too small for most institutional debt funds that have minimum loan sizes and overhead structures built around larger deals. Fannie Mae and Freddie Mac both offer small balance programs that can work well on multifamily in this size range, but both programs require stabilized occupancy and a trailing income history that a renovation-in-progress asset cannot produce. The sponsor was not going to manufacture 90 days of occupancy before closing. The asset was not there yet, and that is the whole point of the trade.
The physical profile of the building added underwriting friction. Little Havana's housing stock is heavily weighted toward construction from the 1920s through the 1960s. That means any honest underwrite has to account for deferred maintenance exposure, probable plumbing and electrical remediation, and Florida's heightened structural scrutiny that followed the Surfside collapse. Lenders writing Florida bridge deals on older buildings are asking harder questions than they were three years ago, and they should be. A sponsor who walks in without a clear construction scope and a credible contractor relationship is going to lose the room fast.
On top of the physical complexity, Florida's property insurance market has repriced dramatically. Coastal Florida insurance costs are now a real line item that affects achievable DSCR during stabilization, and bridge lenders who are underwriting exit cap rates and stabilized value need to stress-test the permanent loan takeout against a higher-cost insurance environment. That compression matters when you are sizing the loan and projecting whether the refinance pencils at the end of the bridge term.
One factor worked clearly in the sponsor's favor. Florida preempts local rent control at the state level. That is not a small point. The same value-add trade executed in California or New York carries political and regulatory risk that can materially impair the business plan. In Miami, when a unit turns, the sponsor can reset rents to market. The rent growth that makes this submarket compelling is actually capturable, and a lender underwriting the exit value can underwrite it with confidence.
The Solution
We placed this loan with a non-bank bridge lender operating nationally, a private debt fund with an established track record in Florida value-add multifamily. The structure came together as a floating-rate bridge loan with a two-year initial term and extension options tied to performance milestones. The loan closed in the mid-70s as a percentage of total cost, inclusive of the renovation budget. The draw facility was structured on a reimbursement basis with inspection-tied disbursements, and the interest reserve was sized to carry the debt service load through the projected turn schedule without requiring the borrower to feed the loan from outside cash flow during construction.
The lender's comfort with Florida older-vintage product, their ability to underwrite to stabilized value rather than in-place income, and their internal approval process that did not require a credit committee cycle measured in weeks were all reasons this placement worked. A regional bank's credit box would not have accommodated the renovation draws or the thin in-place coverage. A life company would not have looked at it. The deal needed a lender built for exactly this situation.
The Outcome
The borrower closed on time, won the property against competing offers, and started renovation with a funded draw facility in place from day one. The business plan is intact. When the asset reaches stabilized occupancy and trailing cash flow supports it, the exit into agency small balance or conventional permanent debt is a clean execution. The bridge did what a bridge is supposed to do: it bought the sponsor time and capital to create the asset that the permanent market will eventually want to finance.