Bridge financing

Bridge loan for real estate transactions

Short-term financing for developers and investors who need to close the purchase of land or an asset before meeting a bank’s requirements. From €7 to €50 million, with a single disbursement and terms of 6 to 24 months.

Analyze your project

We assess every deal case by case

Amount: 7 – 50 M€
Maximum LTC / LTV: 80 % / 50 %
Annual interest rate: 6,5 – 8,5 %
Term in months: 6 – 24

What is a bridge loan

A short-term financing solution that covers a capital need during a transitional phase of the project. It bridges the gap between the moment the developer needs the funds and the moment it can access permanent financing.

Transitional need

Covers the gap between a transaction that must close now and bank financing that is not yet available.

Single disbursement

Unlike a development loan, the capital is not released in tranches against certification: it is paid out all at once.

Defined exit

Repaid through bank refinancing, a development loan taking its place, or the sale of the asset.

This product is also known as bridge financing or bridge credit — different names for the same instrument.

How a bridge loan works

Five moments, from the point the capital need arises to the moment the bridge loan is repaid.

Need

There is a transaction to close and bank financing is not yet available.

Structuring

The amount is set according to the cost and value of the asset, usually with a mortgage guarantee.

Disbursement

The capital is paid out in a single payment, with no tranches or works certifications.

Milestones

Planning permission, marketing, pre-sales or stabilisation of the asset.

Repayment

Bank refinancing, a development loan or the sale of the asset.

Bridge loan for companies, not a bridging mortgage

This is the most common confusion, and it is worth clearing up before going further: these are two different products, for two different clients.

Individual

Bridging mortgage

Borrower: Private individual
Purpose: Buying a home before selling the previous one
Amount: Tens or hundreds of thousands of €
Who grants it: Retail banks
Assessment: Personal solvency and payslips

Professional

Bridge loan

Borrower: Developer, investor or company
Purpose: Acquiring land or a real estate asset
Amount: Millions of euros
Who grants it: Specialised funds and platforms
Assessment: Viability of the project and the developer

Xenia Capital finances professional transactions exclusively. If you are looking for a bridging mortgage to move house, your counterpart is a retail bank, not us.

Bridge loan conditions

Reference conditions. Each transaction is assessed individually and final terms depend on the asset, the developer and the agreed structure.

Maximum LTC / LTV: 80 % / 50 %
Minimum amount: 7.000.000 €
Maximum amount: 50.000.000 €
Interest rate (p.a.): 6,5 % – 8,5 %
Arrangement fee: (PIK)1 % – 2,5 %
Exit fee: 0,5 % – 1,5 %
Minimum term: 6 months
Maximum term: 24 months
Interest payment: (100 % bullet)Partial or at maturity
Interest capitalisation: Monthly, bimonthly, quarterly or semi-annually

How to read a bridge loan’s conditions

Four concepts that determine how much capital you can obtain and what it really costs you.

LTC

Loan to Cost

Percentage of the total cost of the transaction covered by the loan. An LTC of 80% means you contribute the remaining 20% as your own equity.

LTV

Loan to Value

Percentage of the appraised value of the asset represented by the loan. It acts as a second limit: the more restrictive of the two applies.

PIK

Payment In Kind

The arrangement fee is not paid in cash at signing: it is capitalised and paid at maturity. You are not decapitalised at the outset.

Bullet

Payment at maturity

100% of the interest is paid at the end, together with the principal. There are no cash outflows during the life of the loan.

When to use a bridge loan

Five scenarios in which a bridge loan solves something bank financing cannot yet solve.

Buying land before obtaining a permit

The most common case. You need to close the purchase of the land, but the bank will not step in until there is a building permit and a minimum level of pre-sales. The bridge loan finances the acquisition and is repaid when a development loan replaces that debt.

Exercising a purchase option or a deposit agreement

When the contract sets a closing date the bank circuit cannot meet, the bridge loan allows you to close the transaction without losing the deposit or the asset.

Refinancing debt with an upcoming maturity

Replaces financing that matures before the project reaches its exit milestone, giving room to complete the sale or the final refinancing.

Covering the period until reaching pre-sales

Banks usually require between 30% and 50% pre-sales. The bridge loan covers the interval until that threshold is reached, at which point the transaction moves to bank financing.

Acquiring an asset to reposition it

Purchase of a building intended for a change of use or refurbishment, where the asset does not yet generate cash flow and does not fit the criteria of an investment loan.

Is your case different?

Tell us about the transaction and our investment team will assess whether it fits a bridge loan or another of our products.

Bridge loan or development loan

These are complementary products, not alternatives: in many transactions the bridge loan precedes the development loan.

Variable	Bridge Loan	Development Loan
Project phase	Acquisition	Construction
What it finances	Purchase of land or asset	Construction or refurbishment costs
Disbursement	Single	Progressive, against certification
Leverage	80 % LTC / 50 % LTV	85 % LTC / 70 % LTGDV
Amount	7 – 50 M€	7 – 100 M€
Interest rate	6,5 % – 8,5 %	5,5 % – 7,5 %
Term	6 – 24 months	24 – 60 months
Typical exit	Refinancing or development loan	Sale of units

Is your transaction already in the construction phase? Then what you need is a development loan. And if you need to finance the purchase and the construction under a single structure, the product is Whole Loan.

Bridge loan versus bank financing

We do not compete with banks: we step in where they cannot yet.

Reference

Traditional banking

Decision criteria: Risk policy and pre-sales
Pre-sales required: 30 % – 50 %
Building permit: Usually required
Leverage on cost: More conservative
Eligible asset types: Standard residential
Interest structure: Periodic amortisation
Uses up bank risk capacity: Yes

Our proposal

Xenia’s bridge loan

Decision criteria: Viability of the asset and the developer
Pre-sales required: Not required
Building permit: Not always required
Leverage on cost: Up to 80% LTC
Eligible asset types: Residential, hospitality, alternative living
Interest structure: Partial or bullet at maturity
Uses up bank risk capacity: No

What assets we finance with a bridge loan

Residential, hospitality and alternative residential models in Spain and Portugal.

Residential build-to-sell

Residential development for sale, exiting through the handover of the units.

Residential build-to-rent

Residential for rent, refinanceable once the asset is stabilised.

Hospitality

Hotels and aparthotels, either new-build or repositioning of existing assets.

Alternative living

Coliving, flex living, serviced apartments and short- and medium-stay accommodation.

Requirements to obtain a bridge loan

We assess each transaction individually, but the review always comes down to three things: who is developing, what the project is, and what secures the transaction.

The developer

Demonstrable experience
In real estate development, investment or project management.
Relevant track record
Preferably in projects with characteristics similar to the one being financed.
Own equity contribution
Significant, to ensure alignment of interests.
Solvent counterparties
Contractor, architects, project managers, sales agents and operators.

The project

Clearly defined project
Solid business plan, detailed budget and a realistic execution schedule.
Viable financial structure
Leverage and returns compatible with the risk taken on.
Clear exit strategy
Sale of units, bank refinancing or sale of the asset.

The asset and control

Control over the asset
Ownership, a deposit agreement, a purchase option or another legally binding structure.
Planning visibility
Permit and zoning status appropriate to the project phase.
Transparency and reporting
Financial, technical, legal and commercial information available throughout the life of the loan.

What we do not finance with a bridge loan

To save you time: these transactions fall outside Xenia Capital’s focus and we will not be able to review them.

Mortgages for individuals
Moving primary residence
Residential self-build
Renovations of private homes
Personal loans
Non-real-estate assets
Transactions outside Spain and Portugal
Amounts below €7 million

Documentation required to apply for a bridge loan

The more complete the initial information, the more solid the preliminary review of the transaction will be. You do not need everything finalised to start the conversation.

Executive Summary

Summary of the transaction: asset, amount requested, structure and exit strategy.

Financial information

Financial statements of the developer company and any guarantors.

Valuation

Valuation of the asset or land issued by an accredited valuation firm.

Planning information

Zoning status, permit status and any encumbrances affecting the asset.

Business Plan

Project business plan with an execution and sales schedule.

Developer’s experience

Track record of comparable projects already delivered by the developer’s team.

Financial model

Model with assumptions, stress scenarios and a monthly business plan.

Registry status

Land registry extract and ownership of the asset that will serve as security for the transaction.

Bridge loan application process

Six stages from receiving the transaction to disbursement.

Step 01
Receiving the transaction
You send us the summary of the purchase or refinancing, the expected exit, and the team’s track record.
Executive summary
Step 02
Preliminary review
The investment team assesses the asset, the amount, and whether the bridge loan’s exit is realistic.
Investment team
Step 03
Letter of intent
Amount, LTC and LTV, price, mortgage security and conditions precedent to closing.
Term sheet
Step 04
Due diligence
Valuation of the asset, legal and planning review, and KYC/AML checks.
External advisors
Step 05
Investment committee
Approval of the transaction and the final structure of the loan.
With Oaktree
Step 06
Formalisation and disbursement
Signing before a notary and transfer of the funds in a single payment.
Notarial deed

Frequently asked questions about the bridge loan

About the bridge loan for professional real estate transactions.

What exactly is a bridge loan?

It is short-term financing that covers a capital need during a transitional phase of the project: the purchase of land or an asset, the execution of an earnest money deposit, or the refinancing of maturing debt, while the definitive financing is being closed. It is disbursed in a single drawdown and repaid with the sale of the asset, with a development loan or with bank financing.

Is a "préstamo puente" the same as a "crédito puente" or a bridge loan?

Yes. All three terms describe the same instrument. In the Spanish professional market, "préstamo puente" and "crédito puente" are used interchangeably; "bridge loan" is the English-language name for the same product.

Do you offer bridge loans to individuals?

No. Xenia Capital finances exclusively professional deals for developers, investors and companies. If you are looking for a bridging mortgage to move house, your point of contact is a retail bank.

What is the minimum and maximum amount?

As a reference, between €7 and €50 million per deal. The final amount depends on the cost and value of the asset, the business plan and the agreed structure, and does not constitute a binding offer.

What maximum leverage do you accept?

Up to 80% of the total cost of the deal (LTC) and up to 50% of the asset's appraised value (LTV). The more restrictive of the two limits applies, and the remainder is provided as own equity.

What is the interest rate on a bridge loan?

As a reference, between 6.5% and 8.5% per year, plus an arrangement fee and an exit fee. Interest may be paid partially or in full at maturity (bullet) and fees may be capitalized (PIK). Each deal is analysed individually and the terms do not constitute a binding offer.

What is the usual term of a bridge loan?

Between 6 and 24 months, depending on the expected exit: sale of the asset, bank refinancing or the entry of a development loan.

What is the difference between a bridge loan and a development loan?

A bridge loan provides short-term liquidity to buy, refinance or launch a project while the definitive financing is being closed. A development loan finances construction, with drawdowns against works certificates and no mandatory pre-sales.

What documentation do you need?

A description of the project, its location and planning status, the cost budget, the sales or operating plan, and information about the development team. That is enough for an initial assessment.