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Permanent Financing for Commercial Real Estate
Permanent financing options for commercial real estate include life company, bank, and in some cases CMBS loans.
Permanent Senior Debt for Commercial Real Estate
Commercial Real Estate Loans understands how long-term capital, leveraged correctly, can improve levered returns. We also understand the need to drive down interest costs and increase cash flow by maximizing amortizations.
While many types of lenders offer permanent financing options, important differences lie in the details.
Life companies generally offer the most aggressive permanent financing, but they typically only consider Class A commercial assets in top markets. They also offer lower leverage and shorter amortizations. However, the longest fixed-rate loans are mostly fully amortizing.
CMBS loans start at just $2 million and offer the highest leverage, up to 75%, with the longest amortizations of up to 30 years. However, their spreads lead to higher rates than life company loans due to liquidity issues in secondary markets.
Banks traditionally offer a good blend of the previous two commercial loan options. For transactions of $25 million or more, lenders are generally more aggressive. At that size, pension funds and large institutional lenders may become involved as well.
Commercial Mortgage Terms for Permanent Financing in 2025
Minimum Loan: $1 million
Term: Up to 10 years
Leverage: Up to 75% LTV
Amortization: 20 to 30 years
Recourse: Non-recourse options are available
Prepayment: Defeasance, step-down, or yield maintenance
Uses: Typically, acquiring or refinancing commercial real estate
Life companies
National and regional banks
Institutional lenders
Pensions funds
Private debt funds
Lowest rates
Longest terms
Best leverage
Longest amortizations
Fixed rates
Call protection (expensive prepayment penalties)
Limited ability to recapitalize (with sale or refinance)