The Crittenden Report asked two industry leaders and direct bridge lenders, Boots Dunlap, CEO and co-founder of RRA Capital and TR Hazelrigg, IV, president and co-founder of Avatar Financial Group, for their insight about the bridge lending market. Here are their thoughts.

What are your predictions for bridge lending going forward?

Dunlap: Tourist capital flooded bridge lending the last three years. Now the tide is going out. Borrowers waited for rates to bail them out. Didn’t happen.

Meanwhile, the maturity wall is here: nearly $875B coming due in 2026 alone. Lenders are done extending and pretending. Assets are getting taken back. Forced sales are accelerating. That combination equals a major setup for bridge lending over the next 12 to 36 months.

At the same time, equity capital is finally re-entering CRE, collapsing the bid/ask spread and restarting transaction volume. Our bridge lending requests are already up 27% year-over-year. Ironically, AI may be helping real estate. Investors are realizing there are very few truly AI-proof businesses. Hard assets suddenly look a lot more attractive.

Hazelrigg: Bridge lending should remain an important source of capital for CRE borrowers over the next several years, with demand driven by a combination of loan maturities, higher borrowing costs, more conservative underwriting and lower loan sizing on the permanent side, and sponsor business plans that need more time to execute. In most cases, the underlying asset is fundamentally sound. The driver is an existing capital structure that no longer fits the current rate environment, or a property that needs additional time to reach a sale, refinance, lease-up, stabilization or recapitalization.

The best bridge lenders will be those that can distinguish between a temporary capital need and a fundamentally flawed asset. That distinction carries far more weight in this cycle than it did when rates were lower and exit financing was easier to obtain.

What will be the biggest changes/trends in bridge lending going forward versus years past?

Dunlap: Bridge lending underwriting used to be roughly one-third property, one-third market and one-third sponsor. Today, it is probably 60% sponsor/operator and 40% everything else.

For most of the last cycle, the market gave away free rides. Rent growth, cap rate compression, and easy liquidity could cover up mediocre execution. That is no longer true. In today’s environment, the performance gap between a great operator and a merely good one is massive — and “good” is often not enough to create value.

As a result, bridge lending has become far more execution-focused. Lenders now need first-round draft picks across the board: sponsors, property managers, leasing brokers and operating partners. In this market, the operator is the asset.

Hazelrigg: Bridge lending is becoming more selective, more structured and more focused on current asset-level fundamentals. A few years ago, many lenders were underwriting with assumptions of continued rent growth, cap-rate compression and readily available exit financing. Today, lenders have to underwrite under entirely different conditions. In many cases, higher rates mean a property’s net operating income no longer covers the debt service on the loan it carries, so the emphasis shifts to current basis, realistic exit debt and a more conservative view of value.

Another important shift is that bridge lending is no longer just acquisition financing. We are seeing demand from refinances, loan maturities, discounted acquisitions, note payoffs, partner buyouts and borrowers who need time to execute a business plan before moving into permanent debt. The market is also placing more emphasis on structure. Beyond rate, lenders are scrutinizing leverage, reserves, guarantees, extension options, borrower equity, collateral quality and the credibility of the exit strategy.

What type of properties and deals will bridge lenders target?

Dunlap: Multifamily is still the cleanest bridge lending story in CRE. Yes, the sector is under pressure in some markets from oversupply and softening rents. But it’s still fundamentally governed by straightforward supply/demand dynamics, which makes it the easiest asset class to underwrite.

Every major CRE sector outside multifamily is simultaneously working through structural change: office is still grappling with the long-term effects of work-from-home, retail continues to adapt to shifting consumer behavior, industrial is normalizing after years of aggressive overbuilding, and hospitality faces both consumer spending volatility and the potential impact of AI on business travel demand.

Even niche asset classes aren’t as “niche” anymore. Institutional capital spent the last cycle chasing differentiated yield and flooded into self-storage, IOS, MHCs and other alternatives. The edge compressed.

In this market, simplicity wins. Cash flow visibility matters more than storytelling.

Hazelrigg: Property type is only part of the picture. Basis, sponsorship, cash flow, submarket liquidity and exit strategy all factor into the analysis. The most financeable bridge deals will be those with a clear and executable path to repayment. That can include transitional multifamily, industrial, select retail, hospitality assets with improving performance, owner-user properties, discounted acquisitions, recapitalizations and refinances where the borrower has a credible plan to stabilize the asset or move into permanent financing.

Lenders will be more cautious around assets where repayment depends almost entirely on a market recovery. Office is the clearest example, but even within office, there is a wide range of outcomes. A well-located Class A asset with real leasing activity, a reset basis and a credible sponsor is very different from a commodity office building with declining occupancy and no clear path forward.