How Do I Prepare for Loan Maturity in a Rising Interest Rate Environment?

Preparing for a commercial real estate (CRE) loan maturity in a rising rate environment requires more than lining up a refinance—it calls for early strategy, stress testing, and capital stack optimization. When borrowing costs climb, the margin for error shrinks. Smart borrowers reevaluate every element: terms, timing, leverage, and future cashflow.

Why Rising Rates Make Loan Maturities More Challenging

Loan maturities are intersecting with the highest rates in over a decade. Refinancing has become more expensive and less predictable. Lenders are offering smaller loan proceeds. Debt service coverage ratio (DSCR) and loan-to-value ratio (LTV) hurdles are harder to meet. If property income hasn’t kept pace—or values have declined—operators may face shortfalls, higher equity needs, or unfavorable terms.

That’s why waiting until you’re six months out isn’t enough. You need to plan well in advance.

Key Challenges for Borrowers in Today’s Market

Refinancing Gaps: Loan proceeds may fall short of the current payoff amount—requiring new equity or capital sources.

Cashflow Strain: Higher rates raise monthly payments, potentially affecting reserves, operations, or investor distributions.

Covenant Pressure: Tightening underwriting may trigger DSCR or LTV compliance issues, complicating refinance terms.

Sponsor Disruption: Equity dilution or reshaped economics may reduce promote potential or shift investor returns.

Smart Strategies to Navigate High-Rate Maturities

Start Early—12 to 24 Months Ahead: Early planning unlocks more options for structuring, timing, and negotiating.
Run Sensitivity Models: Test rate, net operating income (NOI), and value assumptions. Understand how multiple paths affect loan proceeds and DSCR.
Evaluate Recapitalization Options: In cases where traditional refinancing won’t meet your needs, consider alternatives like preferred equity, rescue capital, or structured financing.
Restructure the Capital Stack: Reduce leverage or swap equity layers strategically to lower long-term costs—even with higher-rate debt.
Initiate Lender Outreach: Advisors can coordinate early lender discussions—exploring extensions, re-margining, or modified structures.
Hedge Future Risk: If refinancing into floating-rate debt, work with an advisor to evaluate swap or cap solutions to manage variability.

Why Work With a Debt Advisor?

Partnering with a seasoned debt advisor gives you insights, leverage, and structure—not just access to lenders. They help you:

Quantify refinance risk and identify any funding shortfalls

Align maturity plans with your broader portfolio goals

Avoid last-minute decisions that erode control or returns

Track market dynamics that influence rates, capital, and terms

Execute with precision by leveraging advisor relationships

Why Defease With Ease | Thirty Capital is Your Maturity Planning Partner

At Defease With Ease | Thirty Capital, we specialize in navigating loan maturities—especially in complex, high-rate environments. Our advisory team builds custom refinance strategies using capital stack modeling, lender readiness plans, and structured capital options. With deep CRE expertise and technology-enabled analysis, we help you move from reactive to ready.

Do you have a maturity approaching in 2025 or 2026? The best time to start is now. Contact our debt advisory team today.

“We appreciated your patience as you explained very clearly each step of a highly technical process and made yourself available when we needed you to answer questions or provide information. Your efforts made the process seem flawless.”

“Thirty Capital Financial provides true turnkey service. We are a very hands-on client, and the group has met our expectations for process management, cost efficiency, and timing every time. Thirty Capital Financial provides an objective, expert service that helps us meet our transaction goals.”

“Your expertise was critical in making this transaction run smoothly from start to finish. Your knowledge and professionalism made this transaction seamless. You took what could be a complicated transaction and made it easy!”

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