The Opportunity

In late 2025, a borrower came to Requity Lending with a deal that most banks would not touch. A 12,000-square-foot strip retail center in a growing secondary market, anchored by a laundromat and a barbershop, with overall occupancy at 50%. Four of eight units were vacant. The seller, an aging owner-operator, had not marketed vacancies in years.

The purchase price was $950,000. The borrower planned to invest $250,000 in renovations: new facade, updated HVAC systems, improved parking lot, and tenant build-out allowances. Total project cost: $1.2 million.

Why Traditional Lenders Passed

The borrower approached three banks before contacting us. Each declined for the same reasons:

  • Occupancy below the 80% minimum required for conventional commercial mortgages
  • Insufficient debt service coverage ratio based on current income
  • Retail property type flagged as higher risk in bank underwriting models

None of these objections were unreasonable from a traditional lending perspective. But they missed the point of the deal. This was not a stabilized property seeking long-term financing. It was a value-add acquisition that needed transitional capital to reach its potential.

How We Structured the Bridge Loan

We funded a $1.2 million bridge loan with the following terms:

  • Loan-to-cost: 75% of total project cost ($900,000 acquisition financing plus $300,000 rehab holdback)
  • Rate: 10.5% fixed for the term
  • Term: 24 months with one 6-month extension option
  • Interest reserve: 6 months of interest payments included in the loan, covering debt service during the renovation and initial lease-up period
  • Rehab disbursement: Funds released in draws based on completed work, verified by third-party inspection

The borrower brought $300,000 in equity, representing 25% of the total project cost. This skin in the game aligned incentives and provided a meaningful equity cushion for our investors.

The Execution

The borrower closed in 18 days from term sheet to funding. Renovations began immediately.

Months 1 through 4: Facade renovation, parking lot resurfacing, and HVAC replacement completed. Total rehab spend: $180,000. The borrower listed vacancies with a local commercial broker and began fielding inquiries driven by the visible improvements to the property.

Months 5 through 8: Three new tenants signed leases: a dental office, a tax preparation firm, and a quick-service restaurant. Tenant build-out allowances of $15,000 to $25,000 per unit were funded from the remaining rehab holdback. Occupancy moved from 50% to 87.5%.

Months 9 through 14: The final vacant unit was leased to a physical therapy practice. Occupancy reached 100%, though we underwrote the stabilized exit at 95% to account for normal turnover. Monthly NOI increased from $3,200 at acquisition to $9,400 at stabilization.

The Exit

At month 14, the borrower refinanced into a 10-year commercial mortgage at 6.8% with a local bank. The appraised value at refinance was $1.55 million, representing a 29% increase over total project cost. The borrower pulled out their original $300,000 equity contribution and retained a stabilized, cash-flowing asset with no money left in the deal.

Our bridge loan was repaid in full at month 14, six months ahead of the original 24-month term. Requity investors earned the full contracted interest over the 14-month hold period.

Key Takeaways

Bridge loans unlock deals that traditional financing cannot. Without transitional capital, this acquisition does not happen. The borrower recognized value that bank underwriting models could not capture, and bridge financing gave them the runway to execute.

Renovation creates value faster than rent growth alone. The $250,000 in improvements drove $600,000 in value creation. Physical upgrades attracted higher-quality tenants willing to pay market rents, which drove the NOI increase that made permanent financing possible.

Execution matters more than market timing. This deal was not dependent on cap rate compression or macroeconomic tailwinds. The value was created through operational improvement: filling vacancies, improving the physical plant, and managing the asset professionally.

Speed creates competitive advantage. Closing in 18 days gave this borrower an edge in a market where sellers value certainty. Multiple offers were on the table. The ability to close fast with proof of funds was the deciding factor.

Have a Similar Deal?

If you have a commercial property acquisition or repositioning that needs bridge financing, contact Requity Lending. We fund deals nationwide on commercial and residential properties, with term sheets in 48 hours and closings in as little as two weeks. We look for borrowers with clear business plans, relevant experience, and realistic exit strategies.