Timing is everything in commercial real estate (CRE) finance. Engage a debt advisor too late, and you’re negotiating under pressure with limited options. Engage too early, and you risk over-planning bases on property assumptions that may shift before execution.
So, what is the right timing? Consider this simple but powerful principle: the 18-Month Rule. That means CRE owners should begin their debt advisory process at least 18 months before a loan maturity, refinance, or major capital event.
Why 18 months? Because this window provides the right balance: enough lead time to analyze scenarios, structure intelligently, and engage the right counterparties without letting assumptions go stale. In this blog, we’ll break down why the 18-Month Rule matters, what it looks like in practice, and how it can position your portfolio for success in 2026 and beyond.
The Pitfalls of Waiting Too Long
Many CRE firms manage their debt by maturity date, waiting until 6–9 months before maturity to engage a debt advisor to analyze refinance options. In today’s volatile market, rates shift quickly, and leverage can diminish just as fast.
The risks of waiting include:
- Reduced Negotiating Power: Lenders can impose stricter covenants or higher spreads when they sense urgency.
- Limited Restructuring Options: With little time, owners and decision-makers may miss the chance to restructure capital stacks, negotiate extensions, or capture favorable anomalies in rates.
- Fire-Drill Refinancing: Scrambling to pull together financials, appraisals, and investor approvals leads to costly mistakes.
- Lost Opportunity Costs: Missing interest rate opportunities in the marketplace by not proactively managing debt.
Waiting too long forces reactive, suboptimal decisions that erode negotiating power, constrain capital flexibility, and put hard-earned equity at risk.
Why 18 Months Is the Sweet Spot
18 months provides a balanced window — ample time to plan while keeping assumptions relevant. Here’s why this window works:
- Scenario Planning Is Meaningful. Forecasting debt service coverage ratio (DSCR), net operating income (NOI), and cap rates 18 months out produce actionable scenarios without being too speculative.
- Capital Stack Adjustments Are Possible. Owners and decision-makers can restructure mezzanine debt, negotiate with preferred equity partners, or explore JV capital well before maturity.
- Data Collection Is Manageable. Debt advisors have time to normalize data from sources like Yardi, Argus, and loan documents, creating a clear picture for lenders and investors.
- Market Engagement Is Strategic. With lead time, owners and decision-makers can approach multiple lenders, test appetite, and secure competitive terms.
- Optionality Is Preserved. Owners and decision-makers can choose between refinancing early, extending, or recapitalizing based on market conditions rather than urgency.
What Happens During the 18-Month Engagement
An effective debt advisory process unfolds in stages. Here’s what typically happens when you begin the process at the right time:
Stage 1: Data & Diagnostics (Months 18–15)
During this phase, debt advisors consolidate debt terms, maturity timelines, and key metrics like DSCR to build a clear financial picture. They identify at-risk assets or refinancing gaps early and stress-test portfolios under multiple interest rate, NOI, and cap rate scenarios to quantify exposure and prioritize action.
Stage 2: Strategy & Structuring (Months 15–12)
With diagnostics complete, attention shifts to strategy. Debt advisors develop detailed capital stack scorecards and evaluate whether refinancing, restructuring, or loan extensions best align with ownership goals. Financial modeling of internal rate of return (IRR), equity multiples, and promote triggers help owners and decision-makers understand how each structure impacts returns and risk.
Stage 3: Market Engagement (Months 12–9)
At this stage, the team prepares lender and investor materials that clearly articulate the asset’s story and capital needs. They reach out to multiple counterparties to gauge market appetite and negotiate terms that preserve flexibility, ensuring the borrower maintains leverage throughout the process.
Stage 4: Execution & Closing (Months 9–0)
In the final stage, owners and decision-makers select the optimal structure and counterparty based on negotiated terms. The focus turns to coordinating diligence, appraisals, and investor or lender approvals to ensure a smooth path to funding. With proper lead time, closing occurs ahead of maturity, when interest rates are optimal—without last-minute fire drills.
Case Study: Unlocking $1M Through Strategic Debt Optimization
In today’s market, engaging a debt advisor early can mean the difference between reacting to challenges and shaping outcomes. One recent Defease With Ease | Thirty Capital case study illustrates how a multifamily owner/operator partnered with debt advisors well before a key loan transition. By proactively addressing the shift from interest-only to amortizing payments, the team restructured the debt, secured favorable refinancing terms, and unlocked $1 million in cash-out proceeds—stabilizing cashflow and accelerating investor distributions.
This outcome underscores how early engagement transforms refinancing from a tactical necessity into a strategic advantage. With forward-looking analysis, lender outreach, and disciplined execution, the owner/operator optimized timing, preserved flexibility, and strengthened long-term portfolio performance.
Integrating the 18-Month Rule Into Smart Debt Planning
To institutionalize this principle, CRE leaders should:
- Build a Maturity Map: Know every upcoming loan maturity 24–36 months ahead.
- Adopt an Advisory Calendar: Flag each maturity 18 months ahead as the trigger to engage debt advisors.
- Embed in Budgeting: Align advisory timelines with annual budget cycles, ensuring refinancing is stress-tested and planned.
- Educate Stakeholders: Set expectations with LPs, boards, and lenders that proactive advisory is a core practice.
- Keep apprised of current debt market dynamics: Know current lender spreads, LTV, DSCR and DY requirements.
These steps transform debt management from a reactive scramble into a strategic advantage.
The 2026 Imperative
The next 24 months are expected to bring a significant refinancing cycle, continued rate volatility, and increased investor scrutiny. Owners and decision-makers who wait until the last minute may find themselves constrained by market conditions, while those who adopt the 18-Month Rule preserve greater flexibility and control. By identifying refinancing gaps early, they can protect equity value, strengthen relationships with LPs and lenders through proactive transparency, and position their portfolios not only to navigate 2026 but to capitalize on opportunities that others overlook.
At Defease With Ease | Thirty Capital, we’ve spent 25 years helping CRE teams make smarter, more informed debt decisions. Our debt and capital markets experts combine decades of structured finance experience with technology solutions like Lobby CRE to deliver insights that improve timing, strengthen negotiations, and produce superior outcomes across all market cycles. Connect with our team today to learn how early debt advisory can help you optimize timing, structure, and performance.
