A Note from the Founder 03.18.2025

Zachary Urow April 22, 2025

Bridge-to-Bridge Refinancing Trends

  • In the current constrained capital markets, bridge lenders are refinancing existing
    bridge loans without requiring principal paydowns, provided there’s a clear path to
    achieving debt service coverage.
  • This practice helps maintain liquidity for borrowers, but may postpone necessary
    deleveraging within the industry.
  • Operators with developments from 2021 seeking extended timelines can potentially
    negotiate favorable refinancing terms by presenting solid business cases.

U.S. Economic Developments Impacting Self-Storage Investments

  • February job growth underperformed expectations, with 151,000 jobs added, while
    layoffs surged to their highest levels since 2020.
  • Despite a decline in new unemployment claims to 220,000, concerns remain over
    government spending cuts and rising trade tensions.
  • Investors anticipate Federal Reserve rate cuts by June 2025, which could ease borrowing
    conditions and further stimulate self-storage investment.

Our Thoughts

  • The trend of bridge-to-bridge refinancing might help keep deals alive for now, but it
    also means that companies aren’t really reducing their debt. It’s important for
    operators to think about long-term financial stability rather than just pushing the
    problem down the road.
  • With investment activity ramping up, now is the time to secure financing and optimize
    operations for long-term growth.