Why CRE Lending Is Broken—And What You Can Do About It
Let’s just say it: the commercial real estate lending system isn’t working the way it used to. Lender appetites change like the weather. Their credit requirements are kept in a black box, and you don’t know what you don’t know. They have exposure limits, government compliance controls, capital constraints, or someone on the credit committee is just “not a fan” - it’s impossible to keep up with.
I’ve placed hundreds of millions in debt across markets nationwide, and the patterns are clear—the old playbook is outdated. If you're still relying on it, you’re probably wasting valuable energy and leaving money (and opportunity) on the table.
Here’s what’s going wrong—and what actually works in today’s lending landscape.
The Relationship Banking Illusion
We’ve all heard the phrase, “It’s about who you know.”
But in CRE lending today?
Not so much.
A developer I work with had a 15-year relationship with his bank. They’d done multiple successful projects together. Still, when his construction loan reached the final approval stage, the bank pulled back. Not because of his credit. Not because of the deal. But because new regulations and internal consolidation left his trusted banker powerless.
Those handshakes and history? They don’t carry the same weight anymore. The reality is that most “relationship banks” are now bound by institutional-level risk protocols. Your banker might want to help you—but they often can’t.
The Real Cost of Rate Obsession
It’s almost always the first question I hear: “What’s your best rate?”
Fair. But fixating on rate alone can wreck your strategy.
A family office came to me laser-focused on getting sub-9% debt for a multifamily bridge refi request. They passed on solid options that came in slightly above target, missing the forest for the trees. What they didn’t see was how one of those “less ideal” loans had incredibly low closing costs and a prepayment structure designed to fit their transaction budget. It offered more control of their cash flow and real exit flexibility, a very low cost to do business.
We eventually found financing at 10.5% fixed—not their dream rate, but one that gave them certainty of execution. That deal ended up preserving close to $2M more throughout the life of the loan.
Rate matters. But if the structure isn’t right, it doesn’t matter how low the number is—you’ll pay for it later.
The Advice You Should Be Getting
Most “capital advisors” are really just brokers. They gather your info, blast it to lenders, and cross their fingers. That might’ve worked in a market flush with liquidity, but that market doesn’t exist anymore.
A multifamily sponsor came to me after three brokers sent his Charlotte acquisition to every lender on their list—and came back with copy-paste offers that didn’t reflect the actual deal strategy. Not one of them built a case around the value-add plan or preemptively addressed the underwriting red flags.
That’s not a strategy. That’s spam.
What we did instead was map out the deal narrative—highlighting the upside, addressing the risk, and creating a cohesive story. Suddenly, terms shifted. Because lenders knew what they were looking at.
Lenders aren't approving numbers or terms, they're approving a story. When they don't have the full story then they either make it up (in a bad light), or kill it.
So, What Does Work?
Winning in today’s CRE environment means changing how you think about capital.Start by working backwards.
Your exit strategy should shape your financing approach. I recently helped structure a bridge loan where the prepay penalties were designed to burn off just as the lease-up reached stabilization. That move alone saved the sponsor nearly $800K in fees.
Give lenders a reason to compete. One client came to me with a single-tenant industrial refi that other brokers had labeled “unfinanceable.” Instead of chasing approvals, we built targeted competition between a life insurance company and a debt fund. The result? We dropped the spread by 35 basis points, raised LTV from 65% to 72%, and created pre-payment flexibility.
Diversify your relationships. When one client’s lender abruptly reduced max LTV across their portfolio, he had to cough up $4.2M in equity—no leverage, no negotiation, and more time in loan modification land. That was the wake-up call. Now his capital stack is diversified across three banks, two life companies, a debt fund, and a CMBS lender. Flexibility is no longer a hope—it’s a built-in feature.
Shift the story. A retail sponsor came to me needing to refinance a center with a handful of vacancies. Most advisors would’ve tried to gloss over it and pray. We did the opposite. Built a strong lease-up narrative. Outlined management’s proven plan. Three weeks later, we closed at 70% LTV—well above average for a center with similar occupancy.
And sometimes, you have to run parallel paths. For a mixed-use project in California, we explored three completely different capital structures at once. It wasn’t just about finding “the best offer”—it was about seeing what was possible. That process surfaced a hybrid structure that covered 84% of project costs, up from the 75% originally quoted.
The Bottom Line
The lending world is shifting—and fast. If you're still playing by the old rules, you’re going to keep getting mediocre terms, limited flexibility, and returns that fall short of your potential.
I’ve built a framework to help sponsors navigate this new reality. It’s not magic. It’s just intentional strategy—one that aligns capital to your vision, not the other way around.
Want to see how it works?
Download the Capital Matchmaker's Playbook Get the exact system I use to build competitive, flexible capital stacks for CRE sponsors. You’ll get access to my lender-matching matrix, capital structure assessment tool, and the framework top clients use to close on better terms.
