Trepp research on the commercial real estate maturity wave shows more than $1 trillion in loans scheduled to mature between 2025 and 2027. Most sponsors with deals in that cohort are not actively thinking about refinancing yet. Eighteen months before maturity, that complacency has a real cost.
At 18 months out, a sponsor has options. They can test multiple lenders, push back on terms they do not like, and walk away from a deal that does not work. At six months, the maturity date has already become the dominant variable in the negotiation and lenders know it.
The difference between those two conversations is not just timing. It is leverage. And leverage in a refinancing is worth real money.
Why 18 Months of Runway Unlocks Lenders That 6 Months Cannot
When you engage a sponsor 18 months out, the lender pool available is fundamentally larger. A lender who needs 90 days to close is a realistic option. So is one who needs 60 days, or 45. There is enough time to let a process run its course and still start over if it does not produce acceptable terms.
That patience is a negotiating tool. A lender who knows the sponsor has 18 months and multiple alternatives is going to offer sharper pricing than one who knows the sponsor needs to close in the next 90 days regardless of what the term sheet says.
At six months, the institutional lenders who offer the best rates are often already off the table because their timeline does not fit the remaining runway. The deal routes to whoever can close in time, which is a smaller and more expensive pool of capital. Deals that hit the market inside 90 days of maturity carry spreads 25 to 50 basis points wider than comparable deals with more runway. That premium compounds over the life of the loan.
And it is not just the spread. The covenants are tighter, the reserves are larger, and the closing conditions are more aggressive when the lender holds all the leverage.
At 18 months, the sponsor controls the process. At six months, the maturity date does.
A 1.18x DSCR Is a Problem at 18 Months and a Crisis at Six
The most underused advantage of an 18-month runway is not the extra time to find a lender. It is the time to improve the asset before it goes to market.
A property running at 1.18x DSCR discovered 18 months before maturity is a problem that can be solved. The sponsor has time to renew leases before they roll, push back on a property tax assessment, renegotiate a management contract, or address a deferred maintenance item that is inflating the expense line. Six months of focused operational work can move a coverage ratio from below the floor to comfortably above it.
The same discovery made at six months before maturity is not a problem that can be solved in time for the refinance. It becomes a structuring problem instead. The deal needs a preferred equity piece to bridge the gap, a lower loan amount, or a private credit execution at higher rates. The sponsor ends up paying more for capital they would not have needed if the conversation had started earlier.
The gap between what an asset could be at market launch and what it actually is when a sponsor first starts thinking about refinancing is where deal value is either created or left on the table.
The Prepayment Math That Comes Before Any Early Refinance Conversation
Before an 18-month refinance strategy can advance, there is one practical question that determines whether early refinancing is financially viable.
Many loans originated in 2020 and 2021 carry yield maintenance or defeasance provisions that make early payoff expensive. Yield maintenance requires the borrower to compensate the lender for the interest income they would have received through the original maturity date. Both can be costly depending on the interest rate environment at the time of payoff.
A sponsor whose existing loan carries significant prepayment costs may find that the savings from better terms on a new loan do not outweigh the cost of exiting the old one. That math needs to be done before any lender is contacted. The answer determines whether the 18-month strategy makes financial sense or whether the sponsor is better off holding to maturity.
This calculation is not complicated. It has to happen at the beginning of the process, not after lender relationships have already been invested in a strategy that turns out not to be worth it financially.
The Practical Move
Track maturity dates across your active portfolio. Identify which sponsors hit the 18-month window in the next quarter. Reach them before the maturity date creates urgency.
The argument is direct. The terms available today with 18 months of runway are better than the terms available in 12 months with 6 months of runway. The difference in rate alone over a 10-year loan on a $15 million asset can be several hundred thousand dollars. That is a concrete number most sponsors understand immediately when it is framed clearly.
For sponsors who push back because they are hoping rates will improve: if rates do improve, a sponsor with 18 months of runway will be positioned to capture that improvement. They can hold the current loan, monitor the market, and move when conditions are favorable. A sponsor with 90 days does not have that choice.
If the existing loan carries prepayment costs, run that math first. If early payoff does not pencil, the strategy is to prepare the asset now and execute a clean refinance as the maturity approaches.
LoanBase helps you identify which sponsors are approaching the 18-month window across your active portfolio, so the early conversation happens before the leverage is already gone.
